This Is A Member-Only Page Also See: Tenant FAQs 1 Lease FAQs List your vacancies today with VacancyList.Net. It's free! What can I do about a negative cash flow?
Should a lease be in writing?
Does it make sense to offer to rent with an option to buy?
Is it legal to ask prospective tenants to see their current residence?
Could refusal to rent available units qualify as discrimination?
What happens if a dispute goes to court?
Can a landlord charge a late fee if the rent is overdue?
How often can the rent be raised?
What is rent control?
What is rent stabilization?
What can be done about noisy neighbors?
Can a landlord be held responsible for break-ins?
If a landlord suspects a tenant of doing something wrong can he go in and look around?
How much of a security deposit can a landlord require?
What can a landlord do with a tenant's deposit?
Can a landlord refuse to return a deposit?
My tenant is a dead beat. Should I bother with a money judgment, or just get possession?
Is there Government money available for rental property rehabilitation?
Do military personal have special rights as tenants?
What is a landlord's best source for help and information? What can I do about a negative cash flow? Punt? The obvious answer is to increase income or cut expenses, but you have probably thought of that. First & foremost: Are you collecting all the rent due you? Usually the market dictates how much rent you can charge, (see raising rents) and government often dictates a large part of your expenses. One other answer to negative cash flow problems is new financing, with either lower interest or a longer amortization period.
Newcomers to our business usually panic at humongous mortgages spread out over two lifetimes. But professional real estate investors usually don't worry about the size of the debt or the length of the term. Cash flow and value appreciation are the name of the game. Return to top Should a lease be in writing? Most of us here believe that every understanding between a landlord and tenant should be in writing to prevent future misunderstandings. However, one of us, an attorney, does not use written rental agreements except to fix a term. He contends that the court interprets anything in writing to favor the tenant. We normally take our attorney's advice, however ...
It is possible that a landlord-tenant relationship can be symbiotic and that there will never be any dispute about anything important. However, most of us here agree that written agreements save everybody a lot of problems. It can be very simple, covering just the basics, or as complete as necessary to make all the parties to the agreement comfortable. In most states the "Statute of Frauds" requires that a lease for more than one year be written. You may want to read our page on Types of Tenancy to help you decide. Then see forms for additional help. Also see: Lease FAQs Return to top Does it make sense to offer to rent a property to a tenant with an option to buy? Perhaps. Every investment should be for sale at the right price.
You should love lovers, children, especially grandchildren, and an occasional dog, but never a rental property. If the sale price and option terms are favorable, and the tenant is one you would otherwise rent to, why not?
Read our page on the subject of a lease purchase or rent with option. Return to top Is it legal to ask prospective residents to see their current residence? Yes, if it is for the purpose of seeing how they keep up their house both inside and out. And that sure is an excellent idea.
Fair housing laws set up a number of "protected classes" but poor housekeepers aren't covered. You can discriminate on that basis, and you can on their ability to pay rent. You MUST, though, have a consistent policy and treat all prospective residents equally. If you inspect one applicant's present home, you'd better be ready to inspect them all. Otherwise you could run into charges that you were screening on the basis of religion, race, sex, children in the family or other forbidden grounds. See Tenant Selection Return to top Could refusal to rent available units qualify as discrimination? Perhaps. Discriminating against a potential tenant who is a member of a protected class, including: Race, Color, Religion, Gender, National origin, Familial status or Mental or physical handicap is prohibited by the Federal Fair Housing Act. In some states discriminating on the basis of a person's ancestry, military background, profession, sexual preference and children is also against the law. Again see Tenant Selection.
In general a landlord must have a good and legal reason for refusing to rent a vacancy to an otherwise qualified tenant applicant. For example, a landlord could reject a tenant who has bad credit, inadequate income or because they wanted to share a two-bedroom apartment with five other people, two large dogs and a snake. See occupancy standards. There are exceptions, to the Fair Housing Law, however. Return to top What happens if a dispute goes to court? Many states have certain days and even special housing courts to handle landlord-tenant disputes. (see evictions) The court clerk will also have forms available for landlords and tenants to file for all of the usual complaints. The judges in these civil courts see countless landlord tenant cases and the proceedings are designed, in theory, to move quickly.
Most non-payment complaints are not disputed - and so tenants are simply told to pay up or move. However, if a tenant makes a claim of inhabitability, retaliation or discrimination, the proceedings may be put off, and a hearing date set for each side to present their proofs. Return to top Can a landlord charge a late fee if the rent is overdue? Yes, but only if a provision of the lease or rental agreement addresses it, and state law permits it. If nothing in writing specifies the late fee and its amount, the landlord can't later decide they want to collect a late fee.
Many states require that a late fees or penalty reflect actual costs incurred by the landlord, or at least that such charges be reasonable. See State Landlord Tenant Law. States, like Massachusetts (M.G.L., c. 186, sec 15B), extensively regulate all aspects of late fees. In that state, landlords may not charge even interest or penalties until the rent is at least 30 days past due. It is also illegal for a landlord to reduce the rent if it is paid on time because the state considers it an attempt to circumvent their law, and that it is just a creative approach to collecting late fees. In Rhode Island, you can't even send a late rent notice until the payment is at 15 days late. Return to top How often can the rent be raised? That is usually not a landlords decision. The answer is dictated by several factors totally outside your ability to control. (Also see: raising Rents)
- Local market conditions
- Competition
- Government
- Tenants ability to pay
If you have a vacancy n a high demand market, start near the top, then if necessary, work your way down until you get the ideal tenant. However, when for rent signs out number trees, it might have been better if you asked: how often can I lower the rent? Remember that when you lower your rents a much larger number of tenants will want to rent from you. That allows you to pick from those who are most likely to stay a long time and take good care of your property. Both of which a greater impact on your profit than does the gross scheduled rent amount that appears on your rent roll. A 10% rent increase that causes a turnover will likely cost you money for at least a year.
If a rental unit is publicly subsidized, rent can only be increased when the lease term expires; and then only by an amount determined by government. Property located in rent control areas has essentially been confiscated by government with the deed holder required to repair and maintain services.
We believe that the bottom line always goes to a tenants ability to pay. If housing costs more than 35 to 40% of a tenants income, they will eventually fall behind and landlords will lose more in the cost of non-payment evictions and re-renting the unit than they make with higher rents that are beyond what the local market can support. Return to top What is rent control? Rent control is dumb. It presumes an ability to control the price of something without having the same ability to control the cost of providing it. Rent control devastates housing and the housing market where ever it is implemented. Such laws actually date back to World War II when the federal government tried to regulate the price of things in short supply, including butter, gas and housing. The federal rent control law expired in 1950, but rent-controlled housing continues to exist. The laws in some states even allow a rent controlled unit to be passed on in a family as an asset. The rent in these dwellings may be increased only by an amount set by the government.
There are countless stories of abuses in rent controlled apartments, and the negative impact such laws have had on affordable housing, but the political will to change them cannot ever be realized without landlord and intelligent tenant activism within the system. Return to top What is rent stabilization? A modern term for rent control. Every sane person knows that price controls only work to reduce the supply, so several states have passed rent regulation schemes called stabilization, as if changing the name will change the inevitable outcome. Rent "stabilization" laws were a politically correct response to a shortage of affordable housing which actually worsened the problem they were enacted to solve. The laws typically cover multiunit buildings and usually exempt one and two-family houses. They:
- set-up rent stabilization boards who attempt to regulate the market through edict
- regulate when and how much rent can be increased
- require that landlords continue to provide essential services (even if at a loss)
- define how, when and why a lease may be terminated
Areas that have rent control have also seriously exacerbated the affordable housing shortage. However, the tenants who enjoy the unreasonably low rents in controlled apartments have demonstrated a political will to protect their favored treatment at any cost to the rest of the community.
To find out the rules where you live, contact the agency which oversees housing matters in your state. A rental housing association or local tenant's group will also have the information. Return to top What can be done about noisy neighbors? Even though a lease promises quiet use and enjoyment of the premises, a landlord is usually not responsible for the acts of neighbors and other tenants. However, the landlord has a both a financial incentive, and a duty to try to alleviate a troubling situation. The best solution is usually local "Dispute Resolution Program" or "Mediation", if available.
If a landlord wants to evict bothersome tenants, it is usually necessary to have good proof, like a diary that notes the dates and times of the rowdy activity, as well as recordings of the noise. In general, however, judges are hesitant to authorize evictions unless the situation has become extremely unpleasant. You almost have to try to resolve the problem as one neighbor to another. Friendly, amicable approaches to neighbor problems should always be tried.
Landlords have the most to lose from continuing problems. Return to top Can a landlord be held responsible for break-ins? Not normally. However, in some places local law requires that landlords take certain safety and security measures, like: making sure that doors and windows lock properly. If a lock is broken and the landlord knew about the problem but failed to fix it, then he might be found negligent and thus responsible for the tenant's losses.
Landlords must always look over their shoulder for trail lawyers lurking in the shadows, who believe that a landlord's lifetime of work should be a risk for any small injury to anyone anytime for any reason. It may pay well to make certain that windows and doors close properly, yards and common areas are well-lighted, and security systems are operable. Apparently nothing you do can keep you from being sued by some scoundrel, but diligence may mitigate your damages. Return to top If a landlord suspects a tenant of doing something wrong, can he go in and look around? No. A tenant has a right to quiet enjoyment of their home. A landlord is bound by the constitution too. Even a police officer may not search without probable cause and a warrant.
A landlord is only entitled to inspect rental property periodically to make sure everything is in order, but even then the tenant must have reasonable notice of an intent to enter. Entering rental property in a non-emergency situation without the tenant's permission should be considered trespassing. The manner and timeliness of a notice to enter depends on state law. RHOL members can check theirs. Return to top How much of a security deposit can a landlord require? It varies from state to state. The customary amount is one month. Some states allow a month and a half's rent, and some allow the landlord to ask for as much as he wants. Check your state law. When the property is rented with furnishings, the landlord may usually request an additional deposit to cover the value of the furnishings.
The landlord should return the deposit--less deductions for cleaning and repair--within a reasonable time after the tenant moves out, usually 30 to 45 days. In some states, a landlord will be penalized with punitive damages if the security deposit is not handled according to the law. Review our page on Security Deposits and the law.
Landlords can and do charge additional deposits for pets. The subject of Pets in Rental Housing is covered in depth on RHOL pages. Return to top What can a landlord do with a tenant's security deposit? Many states require that landlords place security deposits in a separate, interest-bearing bank account and to notify the tenant of the name and address of the bank where the money is held. Some states allow a landlord to keep any interest, in others interest belongs to the tenant. The interest is usually not paid until the tenant moves out. But in some states, if the tenant wants it, the landlord may have to pay the interest at the end of each year.
In states where tenants own the interest, sometimes a landlord is entitled to withhold a reasonable fee for handling charges. It gets so complicated in states like Virginia, that we have a page on the subject. Return to top Can a landlord refuse to return a security deposit? Yes, but only by following state law. We discuss the subject in some depth on a page called Deposits, Disputes and the Law.
A landlord can always deduct payment for back rent, tenant utilities and when the tenant has damaged the premises in a way that devalues the property. However, if the problems are considered normal wear and tear, the tenant cannot be penalized.
Many states require that an inventory, or move in condition, "check list" be filled out and signed by all parties at the time of possession, to help determine what damage can be charged to the tenant when they vacate.
When a tenant leaves damages, the landlord should take photographs and get repair estimates to document the problems. Return to top My tenant is a dead beat. Should I bother with a money judgment, or just go after possession? Why did you rent to a dead beat? Dont you screen your tenants? You will the next time, .... right? To answer your question, always get a money judgment if you can. There are countless ways you may get your money sometime in the future. See: Collect Rent Return to top Do military personal have special rights as tenants? Yes. see: Soldiers' & Sailor's Civil Relief Act of 1940 Return to top What is a landlord's best source for help and information? We naturally think that we here at RHOL are. However, we sincerely believe that every landlord should also belong to their local rental housing association. The groups offer a great many services to both mom and pop landlords and the big time operators, many of which cannot be acquired from any other source. Typically they offer:
- Meetings with your peers
- Newsletters containing important local information
- Low cost credit reports
- Local eviction Lists
- State approved forms
- Local Discounts
- Reliable tradesmen
- Political action
We also believe that a business person can never have too much information about their business and they should use every source available to them. As a result, we will grow, evolve and provide you with everything we can, but we will also link to every other site that we believe will be helpful to some aspect of rental housing. Including: Return to top |