Report on the 65th Session of the Montana Legislature

While the 65th session of the Montana Legislature is history, the bills it passed are just beginning to come into effect. For our industry four bills passed that will affect some or all of our interactions with our customers and, by extension, the consumer’s accounts you refer to us.

The first three pieces of legislation we will examine all have to do with landlord/tenant issues. The fourth bill changes the interest rate on judgments.

Landlord–Tenant

The legislature passed an unusually large number of bills in this arena. Likewise, the governor vetoed an impressive number. None of the vetoes were overridden. After the dust settled, three bills remained. All three provided for an immediate effective date upon enactment, meaning they are all in place at this time.

House Bill 349 clarifies the results of either the landlord or tenant failing to sign a lease that was agreed upon in situations where the tenancy is then consummated by acceptance of rent (if the landlord failed to sign) or possession of the premises (in the case of the tenant failing to sign). In either case, under those circumstances, a lease of one year is established, regardless of the term stated in the unsigned lease.

House Bill 350 removes the onerous requirement of providing a tenant with a list of options to determine the extension period at the end of a lease. Previously, a minimum of three options were required to be provided, with the tenant being able to choose among them. Default extension periods are not prohibited under HB 350, however they are now mutually agreed upon at the time the lease is signed, or, if there is no default extension period in the lease and neither party gives 30 day written notice to terminate, by statute the lease will continue on a month-to-month basis.

Senate Bill 144 allows for electronic mail notification by either the tenant or the landlord, with certain important restrictions. First, any mandatory requirement by the landlord that the tenant provide an e-mail address is added to the list of prohibited provisions. However, the tenant may voluntarily provide an e-mail address. If they do so, and the rental agreement contains a provision allowing for electronic mail notification, then the tenant or landlord my send notifications by e-mail. The notification is not complete however, until a read receipt from the recipient is received by the sender.

Judgment Interest

Senate Bill 293 revises the interest rate in civil judgments. Montana has had a flat 10% interest rate on judgments since the 1980’s. Under SB293 the amount will fluctuate on a yearly basis, with the rate being set by a formula laid out in the statute. Unfortunately the drafters of the bill neglected to assign any governmental entity the duty to announce that rate. Hence, it is incumbent on the prevailing party in an action to be pro-actively knowledgeable in determining the proper rate. The rate is calculated by locating the Federal Reserve System statistical release H.15 Selected Interest Rates for Bank Prime Loans (the rate) as of January 1st of the year in which the judgment is entered. Once that number is established add 3% to determine the allowed interest rate for that calendar year. As SB293 has an effective date of July 1, 2017, the interest rate on judgments entered between July1, 2017 and December 31, 2017 will be the rate as of January 1, 2017 (3.75%) + 3% for an effective rate of 6.75%. The rate for 2018 will be established on January 1, 2018.

It’s important to note that once set, the rate on a particular judgment doesn’t change year-to-year, and also that contracts with a specified interest rate are not affected.