Ryan: A Tale of Two Landlords

In A Tale of Two Landlords, Christopher J. Ryan Jr. (Indiana University Maurer School of Law) explores the use of legal eviction from the landlord’s perspective, focusing on how costs impact landlords’ behaviors in the formal legal process of eviction. Drawing on over 200,000 eviction cases in Kentucky, the study explores the “economy of eviction,” and finds clear differences between landlords based on their location (rural or urban) and scale of their operations (small or large) when attempting to recoup lost rent or go through the eviction process.

The author discusses how the 2008 economic recession fundamentally changed the rental housing market by creating opportunities for private equity firms and hedge funds to purchase and manage many properties as rental units. Combined with increased costs associated with owning and managing property, this created higher barriers to entry for small-scale landlords. Consequently, a larger share of the modern housing rental economy is held by corporate landlords. The study uncovered clear differences in behavior surrounding evictions between large-scale and small-scale landlords.

The author’s most significant finding is that small-scale landlords are more likely than large-scale landlords to settle eviction matters before reaching a final eviction judgment. Small-scale landlords tend to live near or in the same communities where they operate their rentals. For these landlords, the potential reputational harms and relationship damage from a final eviction judgment weighed heavily. In contrast, large-scale, remote corporate landlords pursued more evictions to a final judgement. This was attributed to their tendency to interact with tenants at arm’s length, their desire not to be perceived as a charity, and their financial ability to absorb the transaction costs of the eviction process. Large-scale, remote landlords contribute to higher eviction rates, particularly in rural contexts where landlords are 125% more likely than urban landlords to pursue eviction judgements.

Because the study finds that settlement is the most economically efficient and socially desirable outcome when compared with a final eviction judgment, Ryan calls for policies that support small-scale landlords. For example, tax credits could be offered for landlords who operate rental units within the same communities in which they reside. He also calls for substantive laws that encourage engagement in alternative dispute resolution. The goal is a rental economy that is economically efficient and socially equitable.