We provide here a few questions that have been posted in the Community Forums and our answers to them.
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Do I have the right to restrict the number of persons that can occupy one of my rental units?
Landlords can limit the number of people allowed to rent a unit under various occupancy standard guidelines. Many jurisdictions, including HUD at the federal level, states and cities have published guidelines regarding occupancy. However, one must be very careful when applying occupancy standards. Different jurisdictions have different guidelines. Many rules are truly only “guidelines” and may not stand up to a court challenge, particularly when occupancy standards come into conflict with the protected class of familial status under federal fair housing law or under some even more restrictive law at a state or local government.
Although most landlords are probably most interested in occupancy standards because of real or perceived issues related to more occupants (see Q3 below), occupancy standards have historically been justified based on “habitability.” That is, allowing too many occupants makes the unit less safe or less healthy. Typically, guidelines are tied to building codes (e.g., Building Officials and Code Administrators [BOCA] guidelines), number of bedrooms, or number of square feet, but some guidelines make allowances due to sizes of rooms, layout of the unit, availability of other living areas, age of children, and any physical limitations of the housing such as capacity of septic/sewer or water systems.
One must be sure to understand the applicable occupancy standard laws and/or guidelines in order to avoid charges of fair housing law violation. This is particularly true when children occupants are involved, as fair housing laws prohibit discrimination related to familial status.
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I own a rental home that I wish to list for sale. The lease includes the following clause:
13. INSPECTION OF PREMISES. Landlord and Landlord’s agents shall have the right at all reasonable times during the term of this Agreement and any renewal thereof to enter the Premises for the purpose of inspecting the Premises and all buildings and improvements thereon. And for the purposes of making any repairs, Landlord may deem additions or alterations as appropriate for the preservation of the Premises or the building. Landlord and its agents shall further have the right to exhibit the Premises and to display the usual “for sale,” “for rent” or “vacancy” signs on the Premises at any time within forty-five (45) days before the expiration of this Lease. The right of entry shall likewise exist for the purpose of removing placards, signs, fixtures, alterations or additions, but do not conform to this Agreement or to any restrictions, rules or regulations affecting the Premises.
Does the BOLD section mean I cannot list it for sale until the lease is within the 45 day period of expiration? Also, if I sell the property do I need to negotiate a buy out of the exiting lease with the tenants?
State laws do not limit and lease agreements usually do not limit the landlord in marketing a tenant occupied property for sale or leasing. However, this particular clause does appear to limit the landlord to within 45 days prior to lease expiration for displaying signs for either selling or leasing. One could argue that giving the landlord the right to do so within the 45 days does not eliminate the right to also do so earlier because it does not explicitly forbid doing so. However, contrary to what one sees on TV and in the movies, such technicalities seldom work in real courts.
Even if the words are taken to limit signs, the words do not limit listing of the property. In fact, the words do not even prohibit showing of the property to potential tenants or buyers at any time, whether before or within the 45 day period. Most leases have a specific clause allowing the landlord or his agents to enter the property for a variety of purposes, usually including showing the property to potential tenants or buyers and some states provide that right by statute. Assuming your lease agreement has such a clause, you should compare this clause with the BOLD one to see if it clarifies or conflicts in a way that might create ambiguity and possibly render the clause unenforceable.
I think that the most certain way to resolve the issue might be to encourage cooperation by providing some incentive to the tenant. Perhaps, unbeknownst to you, the tenant would be interested in terminating his lease early and early termination could be traded for modification of the clause. Otherwise, payment of some nominal amount of money might encourage cooperation.
Finally, unless the lease agreement has a specific clause requiring a buyout or otherwise terminating an existing lease, leases go with the property. That is, both the tenant and the new owner must abide by all terms of the lease agreement.
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It is my opinion that more occupants results in more wear and tear and increased other expenses. Can I charge a base rental price for one person with an additional amount for each additional person without being in violation of discrimination laws?
I am not aware of a statute or court ruling that prohibits a landlord from charging extra rent for additional occupants. Two different scenarios come to mind. One is when additional occupants are added during an existing lease term and the other is when filling a vacancy.
Good lease agreements often include a clause that requires the landlord’s permission for a “guest” to stay beyond a certain time (e.g., two weeks within a 6-month period) and a rent increase if the stay will be long-term or permanent. Obtaining consent of the landlord provides the opportunity to amend the lease agreement in other ways in addition to a higher rent. However, it is best to have the increase amount(s) written into the lease, whether for a long-term guest(s) or for an additional co-tenant(s), for a number of reasons, including (1) to avoid arguments later and (2) to minimize any fair housing claims as discussed below.
Of course, most rent control ordinances will limit extra rent for additional tenants and the rules will vary among different rent control jurisdictions. For example, under the Los Angeles Rent Stabilization Ordinance, rent in a controlled unit may be increased by 10 percent for each additional tenant with the exceptions that rent may not be increased for the first minor dependent child of a tenant of record as of 12/8/90.
However, you do need to be very careful to avoid any hint of discriminating against any protected class under federal, state, and local fair housing laws. Of most certain relevance is the fact that in 1988 Congress made it illegal to discriminate against families with children when it amended the Fair Housing Act of 1968. This added protected class is known as “familial status” and includes a variety of defined individuals besides the traditional family unit. Some states and local governments have further extended such protections.
Accordingly, you almost certainly can’t charge more for an additional child than for an additional adult because you consider children to be more likely to cause certain types of damages. I would personally not charge extra for any number of children. That is, if you charged an amount for one adult and a higher amount for two adults, charging for any number of children, whether there is one or any other number of adults, might be considered a violation of familial status protection under federal law or under some issue covered under state statute or local ordinance. However, although this is something about which I’d be concerned, I don’t know of any specific law or court decision to back up that concern.
Charging more for more tenants when filling a vacancy adds the additional complicating issue of how to advertise the varying occupant-dependent rent. Advertising the minimum rent will likely cause a problem when the potential applicant is told that the rent will be higher. The problem is minimized by including the numbers in the advertising or at least discussing the issue immediately upon first contact with potential, whether via phone or email or face-to-face. This should include any additional security deposit if maximum is based on monthly rent.
In my opinion, landlords should resist the temptation to charge unreasonable extra rent for additional tenants. One should realize that the increased expense of additional occupants is proportional to the number of occupants. If adequate screening and proper selection are utilized four occupants should not significantly increase the risk of damages compared to two occupants. More occupants will increase normal wear and tear, but not proportionally. Even utilities that might be paid by the landlord will usually increase relatively little with additional occupants, certainly not proportional to the additional number. This is because (1) there are usually significant minimum service fees independent of usage and (2) few if any usage costs depend directly on the number of occupants.
Retaining good tenants is usually much better than replacing tenants sooner than necessary because one took advantage of tenants when allowing additional occupants. In my opinion, having adequate lease clauses and an acceptable occupancy standard limits a landlord’s downside risk related to additional occupants.
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Most of the issues discussed in these Q&A’s are covered in considerably more detail in our eCourses and/or in our Mini Training Guides.