Where do you obtain your leases and other legal documents? Many landlords and property managers download them from the Internet, which is fine—but it’s always best to have a lawyer who is versed in landlord-tenant law look it over before you sign on the dotted line.
If you don’t have a lease prepared or approved by a legal professional, you could be setting yourself up for trouble without even realizing it. How? By either not understanding the terms of your lease, or by using one that is not applicable in your state.
We learned recently of a new landlord whose lease terminology bit her in the foot. While she thought that she made it clear that pet deposits were non-refundable, she actually states in the lease that the entire amount she was charging ($500) was completely refundable! Here is the language she used:
“Tenant shall pay to Landlord a pet deposit of five hundred dollars, zero dollars of which shall be non-refundable.”
If zero dollars are non-refundable, then the rest must be refundable, right? In addition, the lease stated that the pet deposit would be used for the purpose of cleaning the carpet. A tenant could argue that if the carpets did not need cleaning upon the termination of the lease, the landlord was not entitled to the funds. There were no other possible uses stated, so the landlord could not use the deposit to repair carpet or flooring, replace moldings, or fix any other items a dog or cat might have damaged.
Unfortunately, the landlord did not realize her mistakes until a tenant with a dog moved out and demanded the entire pet deposit returned. The tenant understood that the entire deposit was, indeed, refundable according to the lease they both signed.
The lesson here is to not only understand the terms of your own lease, but to write the lease in plain English. If you want to charge a non-refundable pet deposit, then say so. Don’t add in conditions or uses for the deposit, such as cleaning carpets.
And finally, seek expert advice on lease questions and other legal matters. It’s worth it in the long run!
In many areas of the country, rental vacancies are very low; some are at all-time lows. But that’s not the case in every market. If you’re a landlord or property manager with no available units for lease and a waiting list, you don’t need to worry about whether or not to negotiate the rent. But for those of you who have vacancies to fill, should you be considering it?
Here are some tips for knowing when it might pay to negotiate the rent:
When you’re in a renter’s market. When local economic conditions are such that vacancies are high and demand is low, that’s a renter’s market. Savvy tenants will read the signs: units staying vacant for months, several open units in the same complex or building, and landlords who seem anxious to get a lease signed.
Your tenants moved out months ago. If you have several empty apartment units, or your rental home has been empty for more than a month, it’s probably time to consider negotiating with prospective tenants. Losing a month’s rent for too long can be difficult to make up.
You don’t have other perks or amenities to offer. When attempting to attract new tenants, landlords often waive certain fees or pay for a tenant’s Internet service for several months. If you can’t offer other perks, then rent may be your only place to negotiate and bring a tenant to the table.
You have a high-quality applicant. When you have a tenant who meets your income requirements, passed your tenant screening with flying colors, has a steady job and gets rave reviews from former landlords, it might pay to negotiate on the rent. And if that applicant is willing to sign a long-term lease—such as two years—you might regret not reducing the rent if it’s a deal breaker.
Your unit is overpriced. If your tenant has done her homework, she’ll know what comparable units are going for in your area. If she can walk away and rent another place for less money, you might find it difficult to get a good tenant in your building without matching—or at least coming close to—comparable units.
And don’t forget that in negotiation, you also get to ask for what you want. For example, in exchange for lowering the rent, you might get your tenant to agree to pay before the first of the month, or to pay the first few months up front. You could ask for an 18- or 24-month lease. Or, you could ask the tenant to accelerate his move-in date.
Okay, that’s a trick question. Why? Because your dream applicant shouldn’t “look like” anything in particular: not male, female, black, white, Asian, Catholic, Muslim, American, Russian or any other pre-determined profile. Using a prospective tenant’s race, color, religion, country of origin, gender, family status or disability to either approve or reject him or her for a lease is against the law, after all.
But there are several qualities that most landlords would probably agree make for a dream applicant:
- She can afford the rent: Smart tenants know how much of their take-home salary should go to their rent, utilities, car payment and other bills each month. Dream tenants only apply for rental housing they can afford.
- He has stable employment: A dream applicant is proud to present his employment history, because it shows he’s stable enough to hold down a job for longer than a month.
- She doesn’t balk at the tenant screening process: These days, smart tenants know that they will probably undergo tenant screening. And they appreciate the fact that you care enough about who lives in your rental property to require background checks for all tenants.
- He has a good credit history: The dream tenant has never been evicted, pays his bills on time and lives within his means. He’s not overextended on credit, is not going to have his car repossessed, and will most likely pay his rent on time each month. And, if his credit history is less than stellar, he has a co-signer lined up.
- She has great references: When you call a dream applicant’s former landlords and personal references, they all say good things. And they’re not her friends, co-workers or parents who are pretending to be former landlords!
Remember not to judge a prospective tenant by anything other than their ability to pay the rent and security deposit, and pass a background and credit check. And if you’re lucky, you’ll land a dream applicant who becomes a dream tenant!
Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.
A landlord recently asked a question regarding firearms:
“Since the Newtown, Conn. shooting, I’ve been thinking that I’d rather not have any guns in my properties. I’m concerned that a tenant or a child could be shot by accident or as a result of a domestic disturbance. And what if a shot went through the wall to another tenant’s apartment? Can I ban firearms?”
It’s true that guns and gun laws are a hot news topic. Many landlords are wondering if they have the right to ban firearms from their properties. The answer in most places is “yes.” It’s always best to check your state and local laws to be sure. Minnesota, for example, does not allow landlords to restrict the lawful carry or possession of firearms by tenants or their guests.
While the second amendment to the U.S. Constitution is widely quoted by firearms owners and enthusiasts, it only covers the government’s response to guns held by private citizens. Just as landlords can ban pets, waterbeds and campers, they can ban guns from their properties.
If they prefer to keep a gun-free property, landlords can choose not to rent to gun owners, who, unlike persons with disabilities or other groups, are not a protected class.
Now, we’re not saying that banning guns will make a landlord more popular. It might make prospective tenants angry. Some gun owners might ignore the rule and bring guns onto the property anyway. If you do find a firearm on the property, the tenant would be in breach of the lease.
But if you feel better instituting a no-guns rule, check with an attorney versed in landlord-tenant law, or check your state’s gun laws before instituting it. For tenants with current leases, you’ll have to wait until renewal to add the new provision. Some may choose to move out. And of course, once you have a signed lease, you would not be allowed to conduct a search of a tenant’s unit to look for firearms.
Experienced landlords know: anything can happen in the rental business. Natural disasters strike, vandals damage property, fires break out and thieves are everywhere.
Of course, rental property owners carry insurance protection on their properties to protect themselves from liability and loss. Most policies cover damages and accidents that occur on the property, but not the tenants’ possessions.
Tenant’s insurance, or renter’s insurance, covers personal property in a rental home or apartment against fire, theft, water damage (but not flooding) and vandalism. It also protects tenants in the event that someone is injured in their unit.
It’s a good idea for tenants to buy an insurance policy, but can landlords require it? Absolutely! In fact, many do and for good reasons:
- Tenants with renter’s insurance will be less likely to try to sue the landlord in the event of a loss or injury, since they have their own coverage.
- Renter’s insurance can protect rental property from tenants’ misuse or negligence. For example, if a tenant floods the unit, his or her insurance will pay for the cleanup. Those without renter’s insurance could just move out and leave the mess for the landlord to deal with.
- Having tenants with their own insurance can help landlords avoid claims on their own policies.
- Renter’s insurance can protect tenants and landlords against claims in case of dog bites from tenants’ pets. The renter’s policy can cover the claim, so the injured party is less likely to sue the landlord.
- The peace of mind in knowing your tenants are covered in case of a fire or other disaster can be worth its weight in gold. Insurance proceeds can replace clothing, furniture and other necessities, as well as pay for living expenses in case tenants have to temporarily relocate.
If you do require renter’s insurance, make sure it is clearly explained in the lease agreement. It’s also a good idea to be named as a secondary insured, so you can be notified of lapses in coverage.
The cost of renter’s insurance is often less than $20 per month. If you have prospective tenants who balk at the insurance requirement, perhaps they are not qualified to live in your properties!
If you’re like many landlords, you often have more than one qualified tenant wanting to sign a lease. Let’s assume you’ve already gone through your standard process: application, application fee, tenant background screening and tenant credit check, verifying employers and income, and checking references. Now you have two or more approved prospects, and only one vacant unit.
What do you do? Here are a few guidelines to help you decide:
- Who wants to move in first? Each day your unit is empty, you’re losing money. We give extra points to the tenant whose move-in date comes first. How do you know? Hopefully, you’ve either had this conversation at some point in the process, or your lease application contains the question, “When do you want to move in?”.
- Who has the security deposit and first month’s rent ready? Obviously, it’s a good thing to have all your prospective tenants ready to pay you rent and deposit, but this isn’t always the case. If any approved prospects need some time to come up with the money, move on. And cash is always nice. Let all your applicants know that you will continue accepting applications and showing the unit until the first month’s rent and security deposit are paid.
- Don’t give in to your emotions. You may hear that a prospect can’t pay the security deposit until they move out of their current place. You may hear that they need a week or two to get the rent and deposit together, but they definitely want the unit. They might be nice people, and excellent tenants, but… don’t let them get the upper hand. Don’t forget that he or she may not get the deposit back for awhile, and may not get it all back. So they need to be able to come up with full rent and security deposit for you.
- Be realistic. If a good prospect is looking at your vacancy on the 25th of the month, and want you to hold it until the 1st, it’s not likely you’ll have anyone else ready to move in before then. You can always ask for a deposit to hold the place, and convert it to the security deposit. Adjust your procedures when it makes good business sense.
Landlords and property managers have the right to enter their properties, with proper notice to their tenants. Whether it’s for routine maintenance work, pest treatments or safety inspections, it’s not only necessary to occasionally enter a tenant’s unit, but it’s a good idea to do so. You need to know what’s going on in your properties.
During these routine inspections, landlords and property managers sometimes see things that tenants don’t intend for you to see, such as:
- Ashtrays, cigarette butts and lighters.
- Pet supplies, like food dishes and litter boxes.
- Drug paraphernalia like pipes, lighters and syringes.
- Illegal drugs, such as marijuana or cocaine.
- Evidence of drug manufacturing.
- Signs of a business being run out of the unit.
What can (and should) you do when this happens? Can you evict the tenant? If the occupant is otherwise a good tenant, should you ignore it? First, it’s always important to be familiar with your state’s laws regarding grounds for eviction. But if any of the activity you have witnessed violates the terms of your lease, you probably do have grounds for eviction.
If you’d rather not go that route, then it’s possible to wait until lease renewal time comes around, and inform the tenant that the lease will not be renewed. Of course, you’ll need to provide proper notice, according to the terms of the lease.
Reasons to Consider Eviction or Non-Renewal of a Lease
- Liability: Landlords can be liable for criminal activity that occurs on their properties—even if they are not aware of it. Landlords can be liable for injuries that occur as a result of illegal activity. Landlords can be liable for injuries caused by a tenant’s pet—even if they are not aware of the pet. Laws vary from state to state, but why take chances?
- Health: Smoking in units where it is not allowed can affect other residents, including children. Second-hand smoke carries chemicals and carcinogens through vents, doorways and windows. In addition, cigarettes are the cause of accidental fires.
- Safety: Each year, almost 1,000 smokers and non-smokers are killed in fires caused by cigarettes and other smoking materials.
- Fairness: If most tenants follow your rules, such as not running a business out of the rental unit, it’s not fair to make exceptions for someone who ignores the lease. Charges of discrimination could follow.
Strict and equitable enforcement of rental agreements should be every landlord and property manager’s practice. If tenants are conducting illegal or criminal activities or are breaking the terms of their leases, your best move is to get them out and replace them with tenants who will follow the rules and abide by the lease.
And if you need to, amend your lease agreement to include a paragraph prohibiting drugs and other illegal activities on your property.
Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.
If you own a property and aren’t interested in renting it out for the long term, there are plenty of potential shorter-term tenants that could be a good fit for your needs.
Consider the following:
- Older people who are retiring and want to rent in an area for a few months before deciding where to live.
- Professionals who fell victim to the housing bubble and lost their houses. Many of these people took a hit to their credit, and need to rent until they can get their finances back in order.
- Career-changers who have moved to an area for a new job and wish to buy, but need short-term housing while they look for a house.
- People who are downsizing or upsizing and have recently sold a house, but haven’t found a new one that works.
- People in transition—whether it’s because of a divorce, illness, death of a spouse or something else. They may not be in a position to make a long-term commitment, but a three- or six-month lease works.
- Adult children of elderly parents who need to live nearby to care for them on a temporary basis.
Certainly, most landlords prefer to have long-term tenants to keep wear and tear down and decrease the hassles of finding new tenants. But if you have a rental property that’s empty, that you may be selling, or that you might move into yourself, there are good tenants out there who need a short-term lease.
With the right kind of homework and some advertising, you can find short-term tenants. Take a look at Craigslist’s “housing wanted” section. And post your listing in the “sublets and temporary” section, with a prominent “short-term welcome” in the heading. Try posting flyers in nearby coffee shops, co-ops and grocery stores.
Be sure to conduct tenant screening on all applicants. Even though the lease is only for the short term, you still need to be sure that your tenant is who they say they are, have adequate credit and income to cover rent and no criminal activity in their backgrounds that could pose a threat.
landlords have faced one of these situations:
- You’re doing a routine maintenance inspection and discover an occupant in the rental whom you’ve never seen before. You ask who he is and he replies, “Oh, I live here.”
- You sign a lease with one tenant. A few months in, she mentions that the rent will be late because her roommate hasn’t paid her share yet. Roommate?
- You live upstairs, your tenant lives downstairs. You notice he hasn’t been around lately, but someone else is clearly staying in the apartment. You ask questions and find out your tenant is away for three months, but he sublet the place to a friend.
- Tenants who live next to one of your rental units call and complain about the three cars that are taking up all the available parking. You reply that only two people live in the unit, but they assure you that three people have been seen regularly coming in and out.
What’s going on? Most likely, your tenant has brought in a roommate or sublet part or all of your rental property to an additional person. If your lease agreement states that no subletting is allowed without your authorization, then the tenant is in violation of the terms of the lease.
The problem with subletting, or adding roommates without your knowledge, is that you have no idea who they are, where the work, if they’ve ever been evicted or convicted of a crime, or if their credit history meets your requirements. Without a chance to perform due diligence, including tenant screening and credit checks—the same tenant screening you do on all prospective tenants—you are at risk of liability for the actions of an unknown person. Plus, your property and business are at risk.
Why would tenants deliberately violate the terms of a lease?
- Maybe they don’t thoroughly read the lease, or forgot what the lease said.
- They may think you won’t catch them in the act, as long as they pay their rent on time.
- Perhaps they think the lease terms don’t actually apply to them.
- Or they simply cannot afford their apartment or house without a roommate.
In any of these cases, you likely have cause to send a cure or quit notice. Of course, check your local and state laws concerning eviction notices. You may want to send a reminder to all your tenants that subletting or adding roommates without your authorization is strictly prohibited. If they want roommates, they must undergo the same application and tenant screening process as everyone else. Explain that this is for the safety of all residents. Keep in mind that treating one group of people differently than others could put you at risk of discrimination charges, so make sure the same rules apply to all of your tenants. Finally, notify tenants that violations are grounds for eviction.
If you do agree to a sublease situation, be sure to put everything in writing. A sublease agreement should be signed by all parties and place in your tenant’s file.
Situation: Water pipe starts leaking in wall behind washer and dryer.
Who’s Responsible? Most likely, the landlord. It’s possible that an inside-the-wall leak won’t be noticed until water starts leaking out onto the floor, which could be hours or even days later. Landlords will generally be responsible for a leak like this, but if the tenants fail to inform the landlord immediately (ideally, in accordance with the terms of the lease), the tenant could be liable for a portion of the damages.
Situation: Tenant goes away on vacation and their house sitter leaves the tub faucet on until it overflows. Nobody notices for several hours, and there is damage to the floor, subfloor and ceiling of the unit below.
Who’s Responsible? The tenant is ultimately responsible for negligence damages to the rental property, regardless of whether or not he or she was there when it occurred. The tenant can then try to collect any loss from the house sitter. Hopefully, they have renter’s insurance. In any case, this is definitely not the landlord’s responsibility.
Situation: Toilet overflows.
Who’s Responsible? This might be another case that depends on the circumstances. If the pipes are damaged or root-clogged, it’s not the tenant’s fault. However, if the tenant clogs the toilet up and doesn’t attempt to clear the clog, it’s not the landlord’s fault.
How to Minimize the Chances of Water Damage
- Show tenants the location of the water main shut-off valve. Teach them how to turn off the main water supply. Have tenants initial a clause in the lease that they have been shown where the main is, how to turn it off, and that they are responsible for water damages if they fail to do so (unless nobody is home when the leak starts).
- Insist that all tenants carry a renter’s insurance policy. Many landlords require it, since without such protection, tenants can’t always afford to pay for repairs on the damages they cause to rental properties. If someone is injured on the property, such as from a tenant’s dog or from falling in the rental unit, the tenant’s policy will usually cover the damages, saving the landlord from having to submit a claim.
- Supply a toilet plunger in each bathroom. They’re not expensive, and can prevent many headaches. Include a clause in the lease that the tenant must agree to plunge any clogs they cause or they will be responsible for subsequent damages.
- Include in your lease that tenants must contact you immediately when they discover any water leaks. Give them an emergency contact number and make sure you are available at that number. Emphasize that tenants should not email this information—you must be notified immediately.
- Consider installing drip pans in under-sink cabinets, in case pipes ever leak.
Water leaks and overflows are no fun. Every landlord knows leaks can cause major damages, such as rotted subflooring and drywall, warped wood flooring, mold and mildew. Preventing water damages whenever possible is in every landlord’s best interest.
No matter how competitive your rents are, you need to protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.