Is The Landlord Responsible…..
Some Questions & Answers
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Q1
Is the landlord responsible for the cost of food spoilage if a tenant’s refrigerator breaks down?
A1
Your question says “tenant’s refrigerator.” If the refrigerator truly belongs to the tenant, the landlord would usually have no liability. If the problem resulted from lack of electricity rather than mechanical failure, the landlord would not be liable unless the landlord was personally responsible for the loss of electricity.
However, I think you might mean a refrigerator owned by the landlord and provided by the landlord for the use of the tenant. In this case, it could go either way depending on various facts regarding the refrigerator and to the landlord’s reaction to the event.
One factor would be whether the lease agreement makes the tenant responsible for repairs to the refrigerator and, if so, whether it is legal to do so in the jurisdiction where the rental unit is located for the type of unit involved. In some jurisdictions, landlords are limited in what maintenance the tenant can be made responsible for unless the rental is a single-family home for which there is considerably less limitation.
Another factor would be whether the landlord made reasonable effort to have the refrigerator repaired within a reasonable time after the tenant reported the problem to the landlord. Of course, there could be a lot of secondary issues that would be considered to decide whether reasonable effort was made and whether the delay in repair was reasonable. Issues might include (1) when the tenant knew there was a problem compared to when the problem started – if the tenant discovered his food was spoiled upon returning from vacation, the landlord would not likely be found liable; (2) when the landlord became aware of the problem and the time required to solve it – delays beyond the landlord’s control would likely not make the landlord liable; (3) whether or not the landlord had someone taking care of such issues while the landlord is out of town or otherwise not reachable; (4) whether the tenant ever tried to exercise his rights to have the repair made when the landlord could not be reached within a reasonable time with reasonable effort; (5) whether or not the tenant exercised restraint against opening the refrigerator after discovering the problem before spoilage had begun; and/or (6) if the problem occurs when repair services are not available are in the area where the property is located. Whether or not the extra cost of repair at non-business-hours times might be an acceptable excuse for not getting the matter quickly taken care of would depend on a judge if the matter went to trial.
Regarding items 4 and 5 above, a tenant should be expected to take steps to minimize damages. If the tenant cannot contact the landlord, the tenant could himself call for repair service, pay for it himself, and expect reimbursement from the landlord. If the refrigerator door is not opened, the time before spoilage will be significantly longer than if the door is opened often after the failure occurs.
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Q2
I’m looking for a tenant application form for screening on a commercial building.
A2
I will assume that you are talking about commercial property that will have relatively small to medium size businesses as tenants rather than General Motors or Microsoft. For such property, one usually needn’t have an application form which is significantly different than that for residential. Usually the major differences would be to have lines for providing the business name; the business activities of the applicant business; the names of the principals (the proprietor of a sole proprietorship doing business under a fictitious name, the general partners of a limited or general partnership, the officers of a corporation, the managing members of a LLC); and, in all cases, the names of those who will be signing for the entity.
I assume that you are relatively new to commercial property management, so I’ll mention a few other things regarding commercial leasing that are related to application forms.
For small business tenants, you will almost always be depending on the personal financial strength and the credit and rental history of the individual business principals (and/or one or more guarantors when the principals don’t fully qualify on their own) because the business entity itself will usually have no significant assets. Accordingly, you will want to do credit screening on the principals rather than on the business itself, whether the business entity is a limited liability entity such as a corporation or LLC or is a sole proprietorship doing business under a fictitious name (dba).
If a sole proprietorship or if a general or limited partnership, simply obtain credit reports and perform any other screening (including identity verifications, previous landlord checks, financial condition, etc.) on the sole proprietor or on each individual general partner. If the business is operated by a corporation, LLC, or other limited liability entity you need to do screening on one or more individuals who have the financial condition (individually or collectively) that will make it likely you will receive timely rent payment even when business is bad and who otherwise meet your qualifying criteria.
Different types of limited liability entities may have somewhat different requirements regarding who signs the lease. For a corporation, this might be the President, Secretary, Treasurer, Directors, major shareholders, a combination thereof, and/or any other party or parties necessary to qualify the business to your standards. For a LLC, this might be managing members and/or other members. In either case, managing parties are preferable to non-managing parties because those who are liable may be more careful managers.
One should never lease to a limited liability entity without requiring a personal guaranty from each of those parties who are necessary to qualifying financially unless the entity itself is financially qualified and reasonably certain to be around past the end of the lease period. When I managed commercial properties, I required credit reports (and other screening) on and personal guaranties from at least two officers or directors for corporations and two managing members of LLCs.
For other than sole proprietorships, one should always require written proof of authority for those signing the lease to bind the entity regarding the lease no matter what the financial strength of the business entity. For a corporation, this might consist of the appropriate pages of the Corporate Bylaws or, if necessary under the bylaws, an adequate special Corporate Resolution. For a LLC or similar entity, this might be the appropriate pages of the Articles of Organization, Operating Agreement, and/or Management Agreement. Some entities may also require a specific resolution or other action to bind the entity for specific items such as lease agreements.
For even a general or limited partnership, even though the general partners are by law usually liable for all partnership acts by any one general partner, it is still a good idea to see the paragraphs of the partnership agreement that specify signing authority. This is because a partnership agreement might require the signature of more than one partner in order to legally bind the partnership for certain transactions. Signature of fewer than required partners would bind the signing parties, but may not make the non-signing general partners liable for the lease.
For reasons beyond the scope of this reply, the spouse’s signature should be required along with the principal’s on the lease or on guaranties by any married guarantors.
Finally, be sure that the lease agreement clearly states that the qualifying individuals are personally liable and not just signing on behalf of the business or accomplish this via guaranty agreements.
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Q3
Do you have a sample form for a month to month rental agreement?
A3
There is a “State” Residential Lease Agreement form for each state. The form can be used for either a month-to-month or a long-term rental agreement depending on the ending date inserted into the “TERM” clause. The Word document version can also be modified as needed for specific rental properties.
After logging in, click “Forms by State” under “Landlord Legal Forms,” and select the state of interest.