Court to determine if extended-stay hotel guests should be protected by tenant rights

A case developing in Georgia’s court of appeals could soon determine whether three people who have lived at an extended-stay hotel in DeKalb County are legally recognized as residents, rather than as guests — and, effectively, whether they can be shielded from displacement by the federal eviction moratorium. 

The three plaintiffs, who are represented by the Atlanta Legal Aid Society (ALAS) — including one tenant who has moved out already and is seeking injunctive relief and damages — are delinquent on payments for their stay, and Decatur’s Efficiency Lodge wants them out. After all, they each signed an “innkeeper-guest contract” that explicitly says the hotel can disconnect utilities and remove a guest’s belongings “in the event the rent is not paid when due,” among other issues that might violate the agreement.

DeKalb County Superior Court Judge Stacey Hydrick, however, ruled in January that these plaintiffs are, in fact, protected by landlord-tenant laws. Now, though, Efficiency Lodge — represented by former Gov. Roy Barnes’ firm The Barnes Law Group — is appealing that finding, saying a trial court “erred in ignoring the plain language of the contracts establishing an innkeeper-guest relationship.” 

If ALAS wins the case, the motel would have to follow the state’s formal residential eviction procedure before putting these guests out. Plus, the two plaintiffs who still live there would then be able to request protection from displacement by utilizing the Centers for Disease Control and Prevention’s (CDC) nationwide eviction freeze. But, if the Barnes team wins, the plaintiffs could legally be kicked out without recourse.

“Roy Barnes is formidable,” ALAS attorney Lindsey Siegel told Atlanta Civic Circle in an interview, before adding, “but he’s on the wrong side of this issue.”

ALAS’s clients have been living at the Efficiency Lodge for more than a year, and, their lawyers argue, they made the motel their “permanent residence” by doing things like decorating their rooms, receiving mail there and enrolling their kids at nearby schools. “A school bus picks them up on the street outside Efficiency when school is in-person,” Judge Hydrick’s order says of one of the plaintiff’s children. 

“We are not exactly arguing that the agreements turn into a de facto lease,” Siegel said of the initial innkeeper-guest contract. “But we are saying that there are many indications our clients are tenants. One of those indications is that the rental agreements have no end date (unlike a hotel, where you would always expect to have a check-in and check-out date). Our clients continued to live there indefinitely, and Efficiency continued to collect rent indefinitely, so that indicates that both sides intended this to be a long-term residency.”

It’s been well over a year since the plaintiffs signed any innkeeper-guest agreement, court documents show.

In an appellant response brief, the Barnes team said the plaintiffs’ argument begs the question: “When is the magic time period in which an innkeeper-guest relationship matures into a landlord-tenant relationship? Is it two weeks, two months, two years?” 

Per Georgia law, an innkeeper must pay tax on hotel and motel stays shorter than 90 days. By allowing the plaintiffs to stay longer, ALAS asserts, Efficiency was able to stop paying such tax and, therefore, engaged in a landlord-tenant agreement. 

During the last legislative session, the Georgia General Assembly passed legislation that stated “the extended-stay motels and hotels were not subject to the $5-per-night tax” that would have come into effect after the 90-day stay, The Barnes Law Group noted in its appeal. 

“The General Assembly clearly did not intend to change the definition of an innkeeper,” the document says. “It was simply seeking to tax hotels and motels for the first 90 days and not thereafter.”

In short, Barnes and his team are arguing that state legislators messed up, which “created an accounting nightmare” for innkeepers, according to the appellant’s reply brief.

In an email to Atlanta Civic Circle, Barnes said the issue at hand “is whether a contract can be unilaterally changed by the action of one party.” 

“This has far-reaching effects,” he added. “Can a person who signs a promissory note to a bank say I have decided unilaterally that the note is a joint venture, and the bank can only collect from the profits?”

“Efficiency, like others in the industry, is a short-term-stay facility who caters to construction workers, people who are temporarily displaced and others of the same ilk,” Barnes continued. “It has no desire to be a landlord, and it is not part of the business plan.”

In recent years, due to the COVID-19 pandemic and other “financial pressures,” guests have stayed at the Efficiency Lodge longer than is typical, Barnes said.

“If the trial court’s ruling is upheld, those who stay more than a week or so will have to vacate,” he said. “This is contrary to what the housing advocates want, but it will be necessary to keep the innkeeper status as an innkeeper.”

The involved parties are expected to convene before a panel of judges on Aug. 24, when three DeKalb judges will hear arguments from both sides.

It’s important to note that this is not a class-action lawsuit, which would, by default, cover similar extended-stay hotel guests. The case does, though, have the potential to create precedent for affected parties to seek legal recourse against displacement as the pandemic wreaks havoc on the finances and housing stability of renters across the country.

Siegel said, “This is a novel issue that has the potential to affect landlord-tenant relationships across the state.”