A landlord based in Brazil missed his date in Cleveland Housing Court last month. The landlord’s lawyer did show up, but he wouldn’t be on the case much longer. He was asking the court for permission to quit.
The lawyer, Matthew Rambo, said in court that his clients had a “difference of opinion with me as to whether they need to comply with the court’s orders.”
In an interview with Signal Cleveland afterward, the landlord, Rafael Dornas, and his business partners put it this way: They’ve appeared in person before, but it costs too much to keep traveling to the U.S. for court hearings. Their Cleveland real estate investments soured, and now they want the court to allow them to sell off the troubled properties.
Eduardo Rigotto, another of the Brazilian investors, said that, at this point, “anyone” would be a better landlord than they are.
“We decided we cannot run this business anymore,” Rigotto said in the interview. “We have to sell it.”
This is just one of the hundreds of cases before Judge W. Moná Scott and her magistrates in which a landlord is on probation for housing code violations. Whether they’re based in Brazil, Sweden or somewhere in the United States, owners of Cleveland rental property must pass through Scott’s court in order to resolve code violations or evict tenants.
Now in her fifth year on the housing court bench, Scott spoke with Signal Cleveland recently about how the court has handled the influx of investors buying up pieces of city neighborhoods.
The court’s main interest, Scott said, “is just getting people to treat Cleveland’s transactions, sale and upkeep of property as though we are Shaker and Solon.”
‘Some of them are way over their head’
It can be hard to tell just who is an out-of-state or international landlord. The Brazilian investors, for instance, do business through a limited liability company with addresses in Ohio and Florida. At the end of July, there were 515 active cases in housing court involving landlords with U.S. mailing addresses outside of Ohio.
Some landlords are running out of money, and some bought their properties sight unseen, she said.
“We’ve had landlords come in here frustrated because they didn’t know that there was a housing court,” Scott said, adding, “Some of them are way over their head in that they have too many properties.”
When landlords are found guilty of housing code violations, it’s not uncommon for Scott to sentence them to probation, also known as community control.
As part of probation, there’s a list of things she can order landlords to do: fix housing violations, update rental registrations with the city, complete lead paint certifications and pay delinquent property taxes. In the past, Scott has also ordered landlords not to sell their properties without court approval.
Most LLC landlords do what Scott asks, she said. But if an LLC is ignoring her orders, she reserves the right to order the owner to show up in court personally.
“Attorneys withdraw all day, and property managers come and go,” the judge said. “So the actual owner of the LLC, I personally prefer for them to be in court to be accountable.”
Scott has ordered property investors to provide lists of their Cleveland real estate holdings. It can be difficult to draw up such a list independently, especially if an investor owns properties through multiple LLCs. As Scott put it: “If you own 15 properties, I’m bringing all 15 properties onto the court order.”
The appeals court has pushed back on the judge, such as when she sentenced a local landlord for failing to maintain a house in Old Brooklyn. She ordered him to fix up three houses that he owned: the Old Brooklyn property plus two others.
The landlord owned those three houses through three different LLCs. Only one LLC was a defendant in the case. That proved to be a legal stumbling block.
The Eighth District Court of Appeals partially overruled Scott’s sentence. One LLC couldn’t be ordered to fix up houses owned by different LLCs – even if the same person was behind them all.
If a landlord is truly doing nothing to care for a property, Scott said she’ll see if the county can foreclose for unpaid taxes. From there, the house could go to the Cuyahoga Land Bank for rehabilitation. Tenants, however, can get caught between an absent landlord and displacement.
“It is kind of a tricky situation,” Scott said. “We know there’s a shortage of housing, but how can we keep them in the housing when this person is really just hands off?”
Judge weighs in on ‘Residents First’
The legal ground is changing beneath Cleveland Housing Court. This year, Mayor Justin Bibb’s administration and City Council overhauled the city’s housing laws to contend with unresponsive – and distant – landlords. The mayor branded this new effort “Residents First.”
Now, out-of-town property owners will need to maintain a local agent in Cuyahoga County. Local agents are more than just a mailbox. They must accept legal liability for their clients’ properties.
As an attorney, Scott said, she disagrees with that approach.
“You retain me to handle your property,” she said, putting herself in the shoes of a hypothetical local agent. “I can’t make the repairs on my own out of my own pocket. So if you don’t send me money to make the repairs, you’re telling me I can be liable?”
The Bibb administration has already won over City Council on most of Residents First, but it may have to convince Scott that City Hall can crack down on owners of dilapidated properties.
The city has been filing fewer criminal housing court cases over the last few years – from 3,067 in 2021 to 1,368 last year, according to the judge’s office. At last check near the end of July, the city had filed 634 cases this year, her office said. Scott said she thought prosecutors could be “a little bit more aggressive” in pursuing owners who flip properties without resolving code violations.
In an email, Tyler Sinclair, a spokesperson for the mayor’s office, pointed out that many building inspectors spent time in 2022 and 2023 working on a citywide survey of property conditions – an effort he wrote would “bear significant fruit down the road.”
Scott also nodded toward the challenges that landlords face.
“The landlord business is brutal, I can say that,” she said. “I wouldn’t do it.”
This story was updated with comment from the mayor’s office.
