Arizona landlords are accused of still charging rental tax despite new law. Mayes is investigating

Attorney General Kris Mayes says she’s investigating multiple complaints that landlords are still charging tenants a rental tax, despite a new law banning cities and towns from levying it.

The Republican-backed law took effect on Jan. 1. Since then, Mayes says her office has fielded complaints from tenants whose rent hasn’t declined accordingly, allegedly because some landlords are charging new fees that match the old rental tax.

“We suspect that there is a lot more out there and this is probably just the tip of the iceberg, so my office is looking at this,” Mayes said Monday.

“We want to put landlords on notice that if they try to disguise the rental tax – which was eliminated – as some kind of junk fee, we’re going to go after it,” she added.

Mayes’ office already sent a cease and desist letter to one property management company based in Mesa, Tradelands LLC. At a Tradelands property called the Madrid Courtyard Apartment complex, investigators with the Attorney General’s Office determined tenants were being charged an “administrative fee” that amounted to a re-appropriated rental tax.

“The AGO demands that you end this unlawful practice,” Senior Litigation Counsel Heather Hamel wrote to Tradelands earlier this month. “If The Madrid wishes to charge its tenants new, mandatory fees, it may do so only by lawfully modifying those tenants’ existing lease agreements with the consent of the tenants.”

A Tradelands broker responded by email and said they weren’t trying to skirt the law, but had just been unclear with their tenants. In any event, they eliminated their administrative fee, and promised to refund any tenants who had already paid it.

According to state law, the burden of proof in court is on landlords to prove that any new fees are not being added to make up for the loss of the rental tax, but the law also doesn’t lay out a clear penalty for landlords who violate the law.