How a Corporate Landlord Bill Became an Anti-Squatter Bill

Georgia's institutional investor ban failed in the state House. The more interesting lesson is in how legislatures actually work.

A few weeks ago I wrote about Georgia's SB 463, as a potential template for a federal compromise on the controversial issue of institutional ownership of single family homes.

My exact quote was "Start looking at Georgia".

You can stop now. The Georgia legislative session ended on April 2nd, and industry opposition to the measure killed the proposal. The Georgia bill would have imposed a 500-unit ownership cap on corporate landlords, with a Build-To-Rent exemption and no forced divestiture.

The Georgia bill was far more accommodating to the industry than the federal ROAD to Housing Act, which the U.S. Senate passed last month with a 350-unit cap and a seven-year forced divestiture requirement tacked on. The bill still remains in Congress as the Senate and House versions are yet to be reconciled. But it's worth noting that Georgia's legislature couldn't pass a bill more permissive than what 89 U.S. senators just voted for.

Perhaps the Georgia experience does provide a clue as to what will ultimately happen in Washington on the issue: nothing.

The "Gut-and-Replace"

Before dying, SB 463 underwent a radical transformation. In the final days of the session, the bill's institutional investor language was stripped entirely and replaced with a measure that would provide landlords with new tools to address squatters.

In legislative parlance this is called a "gut and replace," and it happens quite a bit. Bills require multiple readings, waiting periods, and committee action. Late in a legislative session, time runs out. If lawmakers need a vehicle for a new measure and a compatible bill is available, they strip the language and substitute new text. Wikipedia charitably calls it a "substitute amendment," but where's the fun in that?

Georgia's Constitution, like many states, has a "single-subject requirement," meaning that you can't pass a bill which is completely unrelated to the subject of the original bill. Since the substance of both measures fell (in part) under Title 44 of the Georgia Code — "Property" —SB 463 was a perfectly viable vehicle for squatters rights language.

In practice, the state constitutional constraints are a bit more pragmatic: if a majority of the legislature and the governor think it's germane, it will usually hold up.

The U.S. Congress has no such restriction. Bringing things full circle, that's how the House version of the ROAD to Housing Act — ostensibly, a housing affordability bill — left the Senate with cryptocurrency accounting standards attached.

Sometimes it better not to know how the sausage is made.