Archive for the ‘Uncategorized’ Category

Landlord Liability for Dog Bites

July, 2020

Is a landlord liable when a tenant’s dog bites someone? The concern about landlord liability for injury to persons caused by a tenant’s dog often underlies a landlord’s decision whether to allow pets on the rental property. A landlord does have a valid concern about dog bite liability. The number of dog bite claims increases each year and, correspondingly, increased costs for victims’ medical care and awarded settlements.

Data has shown that more than half of dog bite injuries occur at the home. More than two-thirds of U.S. households have pets, with the majority of those pets being dogs. Many of these households are renter households. Pet-friendly rental properties are priority when these households move within the rental markets. A landlord must weigh the potential risks of a pets welcome rental policy against a potential extended vacancy of pets not allowed rental policy.

A dog bite victim’s medical costs are usually reimbursed through the dog owner’s homeowner insurance policy. When the dog owner is a renter and does not have adequate renter insurance coverage, the dog bite victim may choose to include the landlord as a defendant in a personal injury lawsuit. A landlord is perceived as having deeper pockets, i.e., more assets and better insurance coverages than the typical tenant dog owner.

Generally, landlords are not automatically held liable for dog bites. However, landlords have a duty of care responsibility to take reasonable measures to ensure their tenants’ safety and security on the rental property. An incident of a dog bite injury requires investigation of the facts to determine whether the landlord performed to his duties and responsibilities for tenant safety.

Landlords can be held liable when their actions or their failure to act increases the risk for injury or damage from an aggressive or dangerous dog attack. A landlord could be held liable if the landlord had actual knowledge that the dog was dangerous or that the landlord should have known that the dog was a threat to others. As example, if the landlord was aware that the dog had a history of aggression (previously bitten or attacked someone) yet the landlord allowed the dog to remain on the rental property, knowing that the dog could endanger the safety of other tenants, visitors, or general public, the landlord could be held partially liable for future incidents of dog bit injuries or damage.

A landlord could be held liable if he failed to warn all tenants and visitors that there was a dangerous dog on the rental premises. If the landlord knew that the dog posed a threat to others but the landlord did not have legal authority to remove the dog from the rental premises, the landlord must take appropriate actions for warnings of danger, as an example, by posting Beware of Dog signs on the rental premises.

In situations where the landlord had actual knowledge that the dog was dangerous and posed a threat to others but the landlord did not exercise his authority to remove the dog from the rental premises, the landlord could be held liable for injury and damage caused by the dog. For landlords that offer pet friendly rentals, the tenant should be required to acknowledge in a signed pet addendum that if the dog displays vicious, aggressive behavior towards others that constitutes a threat, or becomes a nuisance, the tenant must remove the dog from the rental premises. If the tenant failed to remedy the situation, the tenant breached the lease and is subject to legal action as detailed in the lease terms and conditions. If the landlord’s failed to enforce his lease terms and conditions for landlord removal of the dangerous dog, the landlord is negligent and could be held liable for any injury and damages.

 

 

A landlord could also be held liable if the landlord assumes responsibility to care for the tenant’s dog in the same manner as if the dog belonged to the landlord. By the landlord’s actions, such as feeding the dog, walking the dog, etc., or exercising any control over the dog, the landlord inherits the same liability as the dog owner’s actual liability for the dog’s behavior.

If the landlord fails to maintain the rental premises to a safe condition, which allows the tenant’s dog to escape the rental unit or rental property, and the dog bites someone, a landlord could be held liable for negligence if the landlord knew or should have known about a property defect or item needing repair. The landlord’s failure to maintain the property incurred liability for the injury even if the injury did not take place on property owned by the landlord.

While there can be some amount of risk of liability lawsuits against landlords whose tenants are pet owners, particularly dog owners, there are some risk management measures that can mitigate landlord liability for dog bite incidents.

Due Diligence

A landlord should know the applicable laws regarding landlord liability for the location of the rental property. This includes knowing whether local ordinances prohibit certain breeds of dogs considered dangerous, vicious, and aggressive.

Landlord Liability Insurance

It is always a best practice to periodically review landlord insurance coverages particularly liability coverages. A landlord must maintain the proper amount of insurance coverage to protect his business. Understanding what is covered by insurance and what is not covered by insurance such as policy exclusions and limitations, is a business necessity to adequately protect business interests, defend against claims, and formulate rental policies and practices. The type of coverage and amounts of coverage should include liability coverage for dog bite injuries and other animal liability coverage. It is a good idea to review policy exclusions on dangerous dog breeds to make sure rental pet policies are set accordingly. If a landlord knowingly allows a tenant to have a dog on the rental property that is one of the dangerous dog breeds excluded by his insurance company, a landlord risks being financially responsible for injury and damage caused by the dog.

Tenant screening

A landlord can help protect his business by conducting adequate tenant screening through previous rental history screenings, landlord references, and applicant interviews. Prospective applicants should be advised of the rental policies regarding pets. Pet ownership and the type, breed, size, and weight of a pet can be requested on the application form. As applicable, a landlord may want to meet with the pet and review the pet’s health records, licensure, and/or registration before approving the application. A pet addendum attached to the lease agreement should detail the rules and regulations for having an approved pet on the rental premises.

Renters insurance

As applicable by statute, a landlord should always require as a condition for tenancy that the new tenant purchase renters insurance to protect the tenant’s personal property and provide liability protection for the tenant. It should be made clear that the landlord’s insurance coverages will not provide coverage for the tenant’s personal property from loss or damage or provide liability coverage for injury to others. When the tenant is also a dog owner, the renters insurance should include canine liability coverage. If the tenant’s dog causes property damage or injury to someone, the tenant must look to his renters insurance for coverage.

Lease agreement

The lease agreement is the governing document for landlord-tenant duties and responsibilities. When approved pets are allowed on the rental premises, rules and regulations regarding pet ownership and conduct should be detailed in a pet addendum. Additionally the pet agreement should detail what is considered a lease violation and what remedies will be taken to cure a violation.

As noted above, a lease agreement should specify the type, species of animal, size, and weight limit of a pet, as well as restrict the number of pets per tenant household. Landlords should always prohibit any animals that are excluded from liability coverage under the landlord’s insurance policy, for example, dog breeds that are considered dangerous and aggressive. Before completing new tenant orientation a landlord should review pet owner duties and responsibilities with the tenant and have the tenant acknowledge his understanding of the terms and conditions of the lease including his pet responsibilities.

Property Inspections and Maintenance

Regular property inspections for maintenance and repairs and safety inspections as required by state and local agencies provide a means to discover property damage caused by pets before the damage becomes a larger problem requiring repair or replacement. Additionally regular inspections could uncover a health hazard regarding pet ownership and care that should be addressed promptly for safety and health reasons of the tenant and neighboring tenants.

Are warning notices effective?

July, 2020

A warning notice, oral or written, may be appropriate for a tenant’s first time violation of a lease term or condition that is not a material default of the lease or a potential threat to neighbors or property. A tenant whose previous behaviors have never been a problem may be responsive to an oral request by a landlord to remedy the situation. A landlord should document in writing the details of the landlord-tenant conversation regarding the lease violation and what the tenant must do to correct the violation. A copy of the writing should be placed in the tenant’s file.

A landlord could instead send a written warning letter to the tenant that provides details of the problem behavior including date and time of the violation; the expected corrective action to be taken by the tenant to remedy the problem; citation of the specific lease term or condition that has been violated; and the consequences if the tenant fails to take corrective action for compliance.

A warning letter can be effective in some problem situations but in many other situations, it only serves to delay serving the inevitable notice of termination of tenancy. A warning letter as an informal writing does not qualify as a formal termination notice. Property management experience may serve to guide the landlord toward the most appropriate and/or effective type of notice for the tenant problem behavior.

If a tenant has repeatedly violated terms and conditions of the lease, it is very likely a warning letter will not produce the desired change in the tenant’s behavior. If the problem situation involves dangerous behaviors such as criminal activity, drugs, or threats of violence, a landlord should immediately begin the termination process to end the tenancy.

Tenants who choose to ignore a warning letter or refuse to comply with lease terms and conditions will need to be served with a formal notice for termination of tenancy.

Are landlords legally required to provide air conditioning at rental properties?

July, 2020

A landlord will need to research state landlord-tenant statutes and local city and county ordinances specific to the location of the rental property to determine whether air conditioning must be provided by law.

States and local jurisdictions may address the issue differently depending upon whether air conditioning is considered an essential service required by the implied warranty of habitability or an amenity provided by the landlord for the benefit of tenants at the property.

The implied warranty of habitability is a legal doctrine in most states that requires landlords to offer and maintain leased premises in a safe and sanitary condition fit for human habitation for the duration of the lease. Provision of housing in a safe and sanitary condition includes the provision of essential services defined by state statutes. A common essential service by most states’ statutes requires a landlord to supply water, hot water, and heat in reasonable amounts to provide fit and habitable housing. Only in a few states is the landlord specifically required by statute to supply air conditioning as an essential service. A requirement for air conditioning may be further addressed by local city and county ordinances. Local health and safety codes may require the landlord to supply air conditioning or similar air cooling service as a climate-related responsibility of the landlord to provide heat or cold necessary for fit living conditions.

Many landlords offer air conditioning as a rental amenity for the tenants’ benefit. The lease agreement should provide details of amenities supplied by the landlord including appliances or as permanent fixtures of the premises operating systems. This would include air conditioning provided by a central HVAC system, evaporative cooler or other cooling device such as a stand-alone air conditioning unit.

What are some of the ways a landlord can control moisture issues to help prevent mold in rental units?

July, 2020

A visual inspection of the rental property exterior and interior spaces is one of the most effective ways to detect a moisture problem and/or the presence of mold. Although visual signs of mold are not always obvious, the musty smell of mold is another way to discover moisture problems. Mold can grow on the hidden surfaces behind paneling and wallpaper; the top of ceiling tiles; beneath carpet and pad; or inside heating and cooling ducts. Attics, crawl spaces, and basements provide many opportunities for mold growth. Areas inside the wall around plumbing or heating/cooling ducts may trap condensation and cause water damage. Hidden mold growth should be investigated cautiously since there is the potential to release new mold spores into the air causing additional problems.

Some of the ways to control moisture to help prevent mold include:

  • Inspect and eliminate water leaks by repairing leaky roofs and windows.
  • Repair leaking plumbing and plumbing fixtures and control sweating plumbing.
  • Repair leaking plumbing and plumbing fixtures and control sweating plumbing.
  • Maintain caulking associated with showers, bath tubs, and sinks.
  • Inspect under-sink shutoff valves, usually hidden from view in kitchen or bathroom cabinets.
  • Inspect toilets – wax rings under bowls, seals between bowls and tanks, and shutoff valves.
  • Inspect valves and lines associated with air conditioning and evaporative cooling units.
  • Be concerned about water-related appliances, including proper venting of clothes dryers.
  • Move water away from the building foundation utilizing ground sloping and drainage systems.
  • Install gutters and keep them clean.
  • Ventilate crawl spaces. Cover over the dirt in crawl spaces with plastic to serve as a moisture barrier from the soil underneath.
  • Inspect and maintain HVAC equipment, keeping drip pans clean and the flow unobstructed.
  • Prevent condensation by increasing surface temperatures using insulation, increasing air circulation, and/or reducing humidity.
  • Avoid installation of carpeting directly over concrete floors.
  • Install and use exhaust fans in bathrooms, laundry rooms, and kitchens. Open windows in these rooms when available and as weather allows.
  • Use fans to increase air circulation within the home.
  • Move large pieces of furniture away from wall corners and the inside of exterior walls.
  • Provide warm air circulation to all areas of the home.
  • Open doors between rooms and keep closet doors open to promote air circulation.
  • Ventilate areas with fresh air.
  • Watch for condensation or wet spots.
  • Keep indoor humidity low, in the 30-50 percent range if possible.
  • Use air conditioning and dehumidifiers to reduce moisture in hot, humid climates.
  • Use area rugs that can be taken up and washed instead of carpeting that can absorb moisture that will encourage mold growth.
  • Always clean and dry wet or damp spots as soon as possible and always within 48 hours.
  • Vacuum and clean household areas regularly.
  • Eliminate leakage around windows and doors.
  • Avoid cold spots on interior walls by proper placement of ducts.
  • Install ceiling fans and consider forced air heating where not already in place, as they increase air movement which inhibits mold growth.
  • Install exhaust fans in areas that have moisture sources (replace non-working existing ones), e.g., bathrooms, laundry room and kitchens to improve ventilation.
  • Perform regular inspections to be sure that tenants themselves are not creating problems by failing to cooperate in using available fans, reporting leaks, etc.

Pet Policies

July, 2020

A landlord’s business decision to allow pets on rental premises is an individualized assessment of potential risk of property damage and increased risk of liability for injuries caused by pet behaviors. Pet behaviors, such as chewing, scratching, and marking interior surfaces like carpets, flooring, and woodwork can cause serious property damage. Exterior landscaping can be destroyed by destructive digging behaviors of pets. Pet odors and unsanitary conditions can create waste and nuisance problems on the rental property. Noise from animals can be disruptive to neighboring tenants and excessive noise may violate tenants’ rights to quiet enjoyment of their rental units. Tenant complaints may become more frequent if the noise and disturbance are not properly addressed by the landlord through enforcement of terms and conditions of the pet agreement. Landlord insurance coverages may need to be increased to provide greater protections against claims of injury or damage.

If the business risk is unacceptable, a landlord can set a No Pets policy for his properties. If business risk is acceptable, a landlord can set a Pets Allowed policy that details the terms and conditions for pets on the rental property.

Landlords who have pet friendly properties address concerns of risk through appropriate lease clauses, the use of detailed written pet policies, written pet agreements, and pet deposits, fees, and rents. For many landlords, having pet friendly rental policies can translate into a larger applicant pool, reduced time to rent, lower tenant turnover, and potential for additional rental revenues.

In general, a tenant does not have the right to have an unauthorized pet in his rental unit. Pet ownership is currently not a protected characteristic under fair housing protections. However, landlords as housing providers under the federal Fair Housing Act are required to provide reasonable accommodation to persons with disabilities who require assistance animals. Emotional support animals are considered assistance animals under fair housing guidelines. Accordingly, a landlord must grant reasonable accommodation to a tenant with an emotional support animal even if the landlord’s rental policies prohibit pets.

All tenants, even if they do not have a pet at the time of move-in, should be required to sign the lease agreement containing a pet clause and, as referenced, a separate lease addendum detailing terms and condition of a pet agreement. This alerts tenants that should they want to have a pet at a future date, they will need to comply with lease terms and conditions to move an approved pet into their household.

It is important to address the issue of pets on the rental property in the landlord’s lease agreement. Without an applicable lease clause for pet rules and regulations, there would be nothing to prevent a tenant from keeping any number of pets, and any type of animal on the rental premises without landlord permission.

To be legally enforceable and effective for animal control, pet policies, rules and regulations must be written, specific in nature, and detailed sufficiently in a clear and unambiguous language to adequately protect property, other tenants, and control pet behavior on the property. Pet ownership duties and responsibilities by tenants during their tenancy should be detailed in the pet agreement.

There are many issues to consider when setting adequate pet policies. A landlord should clearly disclose in writing his pet policies to applicants and tenants regarding information and notification requirements for pet ownership during a tenancy. Most pet owners have a domestic cat or dog as a pet, sometimes birds, fish or other small mammals. A landlord’s pet policies can specify the type, species of animal, size, and weight limit of a pet, as well as restrict the number of pets per tenant household. Landlords should always prohibit any animals that are excluded from the liability coverage under their landlord insurance policy, for example,  dog breeds that are considered dangerous.

Pet policies should clearly state that only approved pets of tenants will be allowed on the rental property. A pet policy can prohibit tenants from pet sitting for friends or family and prohibit guests from bringing their pets onto the property.

Having a pet and having an approved pet are entirely different issues that must be clarified with applicants and tenants. Pets must be approved by landlord written authorization before being allowed to move into the tenant household.

A landlord can set pet qualification and approval standards. As examples, a landlord can require all pets to wear identification tags or collars; require proof of required vaccinations, licenses, and registrations per local ordinances; require pets to be spayed or neutered; and require pets to be house trained. Landlord approval of pets is conditional upon the tenant’s compliance with the terms and conditions of the pet agreement. Material violations of pet policies and rules and regulations detailed in the pet agreement may result in landlord action to request removal of the pet from the rental property or legal action to terminate the tenancy.

A landlord’s pet policies should make tenants responsible for their pets. Tenant duties, pet rules and regulations should be clearly detailed in the pet agreement. Some of the common tenant responsibilities include:

  • Tenant has read, understood, and agrees to comply with landlord’s rental policies regarding pets.
  • Tenant shall be responsible for pet at all times.
  • Tenant agrees to keep pet under full control at all times.
  • Tenant agrees to keep pet restrained by hand-held lease or in pet carrier at all times on or off the rental property.
  • Tenant agrees to take all reasonable measures to prevent/prohibit pet from creating a nuisance, disturbance, or annoyance to neighboring tenants.
  • Tenant agrees to not leave pet unattended for an unreasonable period of time.
  • Tenant agrees to clean up after pet and properly and promptly dispose of pet waste inside and outside the rental premises including any and all common areas.
  • Tenant agrees to not leave pet food or water outside rental unit where it may attract pests or other animals.
  • Tenant has disclosed any and all pets in the tenant household. Tenant agrees to request prior landlord written approval of any additional pet or substitute pet.
  • Tenant acknowledges financial responsibility for damage, loss or expense caused by pet.

Regarding the last item above, in general, a landlord can hold a tenant responsible for any damages caused by the tenant, by members of the tenant’s family, by guests of the tenant, by agents of the tenant, and by animals brought on to the leased premises. This includes damages to property of the landlord inside and outside the tenant’s particular rental unit, damages to common areas, damages to property of other tenants, and damages to property of visitors to the property. Also included are injuries caused by any of the listed persons or by their animals.

Pet policies can include requirements for additional deposits, rents, or other fees related to pets but must comply with state statutes and local ordinances. As allowed by statute and lease agreement, a landlord may require a pet deposit to cover costs of pet damages or additional cleaning required to return the rental unit to good condition upon the tenant’s move-out. Accounting and return of pet deposit funds are handled in a similar manner as tenant security deposits. Some landlords charge a non-refundable pet fee payable at tenant move-in as an administrative cost to permit the tenant to have a pet in the rental unit. In addition to the tenant’s monthly rent amount, some landlords may charge an additional amount for monthly pet rent.

For additional risk protections, a landlord, as allowed by state statute, should require tenants carry rental insurance that includes adequate liability coverages including coverage for damage caused by pet accidents. Tenants should review policy coverages carefully to make sure the policy does not contain a dog bite exclusion or other animal-related limitation.

To help mitigate business risk, a landlord should have a strong lease agreement, adequately detailed pet policies and applicable pet agreement, and utilize pet deposits, pet fees, and pet rent as applicable to business necessity and legal compliances.

Rental Applications

July, 2020

The rental application is one of many tenant screening tools to assess potential risk of lease default by an applicant. Risk assessment is an essential management practice in making an informed business decision to offer tenancy. A rental application is the most efficient means to gather preliminary information about a prospective tenant to begin the process of qualifying the applicant to rental standards.

Information requested on the application form should be relevant to business necessity. In screening an applicant for rental housing, with permissible purpose and under legal compliances, a landlord can request any information that would objectively point to the applicant’s ability to pay timely rent and comply with lease terms and conditions.

While the submitted application is an expression of the applicant’s interest in becoming a tenant, the application is non-binding on either landlord or applicant. A landlord is not obligated to offer tenancy to an applicant upon receipt of application nor is an applicant obligated to accept a landlord’s offer of tenancy during the application process. The application form is a source document to begin the process of filling a vacancy by qualifying rental applicants.

A well-developed application form makes it easier for the applicant to furnish information in an organized manner which in turn makes it easier for a landlord to analyze and evaluate applicant information for potential business risk.

The application form, customized to the landlord’s business operations, and vetted for legal compliance, must be used for every applicant. An application form provides a format to gather information and build an applicant profile. Whatever questions are asked on an application must be the questions asked of every applicant. There can be no selectivity or preferential treatment of one applicant over another applicant. The tenant screening process should be conducted in a non-discriminatory manner and in accordance with applicable laws.

There have been recent legislative actions by some states, cities and counties that have impacted tenant screening policies and practices. In those jurisdictions there are now state statutes and local ordinances that may limit, restrict, or prohibit certain tenant screenings at time of application or during the screening and selection process. A landlord will need to research current laws applicable to the state or city/county governing his rental property location to develop legally compliant screening practices and, accordingly, associated rental documents for qualification and screening.

Noting the above disclaimer for compliance with applicable regulations and requirements, most rental applications have a standardized format to capture and organize applicant information into categories.

An application requests basic information about the applicant, such as legal name, current address, cell phone number, email address, and identification verification information such as Social Security number and/or state driver’s license information. A landlord should research applicable laws regarding the disclosure of identification numbers and their use for tenant screening. A tenant screening services provider can provide information on what type of applicant information is required for submission to process tenant screening reports.

Other requested information on an application can include categories such as: rental history over the past 3-5 years with landlord name, contact information, and dates of tenancy; employment history including name of employer, contact information and verification of employment document; proof of income; financial accounts and balances; loan and installment contract obligations; rental references; personal references, designated emergency contact name and contact information; and applicant authorization and consent to obtain consumer reports, such as credit reports and background checks.

Note that when landlords use consumer reports to aid in tenant decisions such as applicant screenings, the federal Fair Credit Reporting Act (FCRA) obligates the landlord to certain regulated practices to ensure FCRA compliance for the protection, privacy, and accuracy of consumer personal information. This may include a separate notice and disclosure requirement for applicant authorization and consent per FCRA requirements. Due diligence by a landlord is required to determine what is needed to ensure compliance.

As the landlord conducts the review and analysis of application information, there is often the need to ask the applicant for additional information or to clarify information supplied on his application form. A landlord must be knowledgeable of fair housing laws to understand what questions are permissible and what questions are not. Questions that violate the rights of protected classes are illegal. Questions, even those asked in friendly conversation, may not stray into issues that are legally protected rights of applicants and tenants. Federal Fair Housing laws prohibit discrimination against the protected classes of race, religion, national origin, sex, color, familial status, or disability. State and local fair housing laws may have additional protected classes and thus be more stringent than federal law.

The application or an attachment to the application may also contain required landlord disclosures by state statute or local ordinance. Disclosures could be the landlord’s policy and practices for tenant screening and qualification criteria, standard rental policies, fees and deposits, utility responsibilities, or other property disclosures required by law.

The application form should also state that failure to provide all items of information requested or providing incomplete or inaccurate information are in themselves grounds for rejecting the application.

An important item on the application form is the signature line.The applicant’s signature on the application attests that all information provided by the applicant on the application form is truthful to the best of the applicant’s knowledge.

For liability protections and to further manage risk, a landlord should reserve a section on the application for management use only. This section can contain the date and time the application was received, the property address, the rent amount quoted, deposits and fees quoted, receipt of deposits and fees paid at time of application, unit availability date, and requested move-in date. With the applicant’s signature on the application, the document serves as confirmation of oral discussions regarding issues discussed at time of application or during a prior meeting. A landlord should not leave himself vulnerable to a misunderstanding of terms and conditions of tenancy or rely upon the memory of either party as to details of any discussion of move-in requirements. Additionally in a few jurisdictions a landlord is required to accept the first qualified applicant following a specified notification period. It is considered a better business practice for a landlord to select the first qualified applicant rather than the most qualified applicant to reduce the risk of a discrimination claim. Showing proof of date and time of application is a first in time practice that provides some protection from claims of discriminatory treatment.

The information collected from an applicant imposes responsibility on the landlord not only to use the information in accordance with all laws, but to also safeguard that information throughout the term of the tenancy and the required retention period following tenancy. At expiration of the required retention period or other applicable statutory requirements, the landlord must properly dispose of tenant records containing personally identifying information in a compliant manner as addressed by statute.

The value of the application form as a risk assessment tool may be overlooked in the filling vacancy process. Rather than rush through this initial screening, a landlord should carefully analyze the applicant’s information and as required, investigate further if red flag issues are discovered. The value of the application is also dependent upon the landlord’s due diligence and incorporation of laws into compliant rental policies, and practices. The application process properly conducted and documented can reduce the risk of claims of discrimination in the screening and selection of applicants. The signed rental application and the tenant screening results support the landlord’s decision to offer tenancy to the selected applicant.

I think my tenant may have moved in a “guest”. What is the best way to handle this?

July, 2020

You should first understand the issue before taking an action. Can you verify by independent means or firsthand observation that the tenant has moved in a permanent guest? As example, has the guest conducted himself as a tenant, i.e., receiving mail at the rental address, moved personal property into the unit, or keep a regular schedule of daily activity at the property? Do the neighboring tenants consider the guest a tenant?

A landlord has an obligation to protect the safety and privacy of all tenants. A guest policy helps to protect the rights of the other tenants and prevent unwelcome or unwanted stays by guests. Accordingly, a landlord has the right to set rules on guest visits to the rental property and set limits on overnight stays.

Tenants have the right to quiet enjoyment of the rental property including the right to have guests stay overnight or for short periods of time. However, a landlord should require a tenant to obtain prior approval of an extended stay by a guest as part of lease terms and conditions.

By asking the tenant for his explanation of the current situation, and reviewing information obtained from the investigation, you can determine the appropriate action to take. It is possible that the tenant misunderstood the terms and conditions of the lease agreement regarding guest stay.

Your discussion with the tenant should include a restatement of lease terms and conditions for occupancy use and limits, guest stay policy, and the legal remedies to cure a lease violation. As appropriate to the circumstances, your discussion of the issue could serve as a warning to the tenant to correct the situation. Follow-up will be necessary to confirm that the tenant has complied with warning/request to remove the guest from permanent stay at the rental unit.

You could require the guest who has exceeded guest policy stay to submit an application for tenancy if the tenant and guest both want to continue occupancy of the unit. You will follow your standard rental policies for tenant screenings to qualify the guest for approval for tenancy.

With the current declared public health emergency, it is also possible the guest is there temporarily to provide help to the tenant for health and safety reasons. If there are extenuating circumstances, the tenant may request a reasonable accommodation of your policy for extended guest stay. You must comply with applicable fair housing laws regarding reasonable accommodation requests.

Alternatively, and as appropriate to the situation, you could serve the tenant with a notice to cure or quit. If the problem is not cured by compliance with the lease agreement (i.e., removing unauthorized occupants) or vacating within the number of days specified in the notice, you could terminate the lease agreement and file an unlawful detainer action. If the tenancy is a month-to-month agreement, you could serve the tenant with the appropriate written notice for termination of tenancy.

My tenant’s lease expired two months ago. He continued to pay rent and I accepted the rent. Now I wonder about our status as landlord and tenant. Did the lease just automatically renew when he paid rent?

July, 2020

If a tenant stays past the lease expiration date, the tenant has held over. Your state or city may address the issue of a tenant holding over by statute or ordinance. If so, you will be governed by what the statute or ordinance says. Your lease may have a clause that addresses holdover and appropriate measures that can be taken to remedy the situation and if not add such a clause. If the lease clause is compliant with applicable laws, the lease is the defining document that governs the issue. You should review your lease for what you and the tenant signed for terms and conditions.

In general, for most states, if a tenant stays past lease expiration date but pays rent which the landlord accepts, the offer and acceptance of rent creates a new oral month-to-month lease between landlord and tenant on the terms set out in the expired lease agreement. You will not be able to change rental terms and conditions without giving the tenant proper notice as required by law, usually 30 days. You could belatedly draw a new lease to present to the tenant. If the tenant does not choose to accept the offer, the month-to-month agreement will continue under the old lease terms until you deliver a notice of termination to the tenant according to the requirements of your state.

However in some states it may be that you and the tenant have created a new lease with the same terms and conditions that were in the old lease. In that case you have automatically renewed the lease. You and the tenant will be bound to the new lease for the duration of the lease term.

What is a risk mitigation fee?

July, 2020

A risk mitigation fee is a fee paid by a rental applicant to the landlord as a requirement for conditional approval for tenancy. The risk management fee is nonrefundable and is in addition to the landlord’s required security deposit fee.

A landlord may be willing to rent with conditions to an applicant who does not fully qualify to rental standards. There could be many reasons that a landlord might require the applicant to pay an additional fee in order to be approved for a rental unit. Some of these reasons could include: the applicant is a first time renter; has a low credit score; has a negative rent payment history; owes back rent to a previous landlord; has a record of missed, late, or past due utility payments; has filed bankruptcy; has provided information on the application that cannot be fully verified; or has some other negative public report that has potential to cause financial harm to the landlord if the applicant/tenant would default on his lease. With the provision of a risk mitigation fee as guarantee, the landlord is willing to take the risk of a future default.

A risk management fee may apply to an individual applicant or could be assessed as household fee for all occupants. The fee amount can vary per landlord to landlord according to stated rental policies, terms and conditions. The fee is usually based upon the nature of a negative event and the potential financial risk to the landlord, and typically could range from less than one hundred dollars to several hundred dollars. The use of this fee should be carefully researched regarding applicable state laws and local ordinances to determine if it is allowed by law and the applicable requirements for its administration and disclosure.

Rents, Fees, and Deposits

July, 2020

Landlords set their rents, fees and deposits in accordance with applicable state statutes, local ordinances and business necessity. In jurisdictions not governed by rent control or rent stabilization regulations, landlords may set any rent amount they choose taking into account what the local rental market will bear. In practice, landlords are advised to set rents that are market competitive. While landlord operating costs influence rent rates, the local rental market determines competitive rents.

Market Rent

Market rent refers to the amount of rent a comparable unit in the same local area would rent for. Market rent is a factor of supply and demand conditions in the neighborhood area for similar properties for location, size, physical condition, amenities and services. Rent amounts are influenced by how much tenants are willing and able to pay for comparable units.

Setting the correct rent for a property can mean the difference between an extended vacancy and a rapid installation of a good tenant. Conducting a market survey to determine current rental rates under existing conditions can help a landlord determine if his rents are competitive. Market research will help determine what rate of increase will keep good tenants and provide satisfactory cash flow for business operations.

Setting the rent much above the market rent has a number of implications. There may be fewer applicants that respond to advertising efforts. For many tenants, a rent that is a small percentage above market rent will eliminate that unit from their consideration. Fewer applicants mean a reduced pool of screened prospects from which to select a tenant. To fill the vacancy a landlord may need to modify his rental standards or accept the possibility of an extended vacancy period.

Lower than market rent could mean reduced cash flow, perhaps a negative cash flow. However a slightly lower than market rent could also result in filling a vacancy sooner, which can offset reduced monthly revenue over the term  of the lease.

Rent Control/Rent Stabilization

Rents may be controlled by governmental regulations, such as rent control or rent stabilization. Briefly, rent control limits a landlord’s ability to freely set and increase rents for his properties. Rent stabilization regulates the rental amount by only allowing rents to increase by a maximum specified percentage annually.

Fees and Deposits

The following list of fees and deposits is representative of some of the more common fees and deposits charged by landlords. Landlords should thoroughly research applicable state statutes and local ordinances regarding fees and deposits before setting rental policies. It may be a good idea to seek legal consultation regarding rental policies if unsure about whether or not your lease agreement is in compliance with all current legal requirements at all levels of government.

Application Fees

Application fees are required by many landlords to cover the cost of tenant screenings for credit and background checks. Landlord-tenant statutes of each state may address the issue of application fees differently. Some states set a maximum fee amount while other states limit the fee amount to actual out of pocket costs as charged by the tenant screening services provider with a provision for a reasonable amount for landlord labor to evaluate and verify applicant data. In a few states there is no stated limit regarding application fees. Application fees are paid at the time of application submission and are generally nonrefundable.

Some landlords may require an application deposit in addition to an application fee.

Administrative Fees

In some states administrative fees are illegal. If not prohibited by law, administrative fees may be charged in addition to an application fee. The administrative fee is usually associated with large rental communities managed by a professional property management company.

Application Deposit

An application deposit is also known as a holding deposit. An application deposit is a deposit paid to the landlord by the applicant at time of application to request the landlord hold the rental unit for the applicant until the processing of his application has been completed. The prospective tenant is giving his good faith assurance to the landlord that he, the tenant, is serious in his interest in the unit and intends to sign the lease upon his approval as a tenant. When the landlord holds the rental unit for an applicant, the unit is taken off the market and unavailable to other qualified prospective tenants who may have to be turned away. The holding deposit is meant to compensate the landlord for damages suffered as a result of withholding the unit from the rental market in the event that the applicant fails to meet screening qualifications or rescinds his agreement to rent the unit.

An application deposit is not a security deposit. At the time of application there is no signed lease agreement between a landlord and prospective tenant. Since the applicant is not a tenant the state’s security deposit rules are not applicable.

Security Deposit

All states allow a landlord to collect a security deposit when the tenant moves in and to hold the deposit until the tenant moves out. Security deposits are funds that legally belong to the tenant and remain a credit of the tenant during the tenancy. A landlord is legally accountable to the tenant for use of the security deposit funds.

State landlord-tenant statutes regulate security deposit limits, deadlines for itemization and return of security deposits, and disclosure requirements regarding certain issues. The statutes provide clear protections to tenants for the use of their security deposit funds and the return of deposits upon tenant move-out.

Deposit disclosure requirements must usually be in writing. Common disclosures require the landlord to disclose the conditions under which part or all of the security deposit may be withheld and how the deposit is refundable. A landlord may be required to provide a written list of preexisting damage to the rental unit, a copy of inspection orders for the unit or a list of habitability defects before collecting a security deposit. In most states landlords that require a security deposit must utilize a move-in/move-out property inspection checklist to document the condition of the rental unit at time of tenant move-in and upon tenant move-out.

In states that require a separate account for holding a security deposit, a landlord is required to disclose the account number, amount on deposit, interest rate, and name and address of the financial institution.

The purpose of a security deposit is to protect the landlord from damage caused by a tenant. Specifically a landlord may only recover funds from a tenant’s security deposit if the tenant has defaulted on his obligation to pay rent (tenant owes past due rents) and/or the tenant has caused physical damage to the property that is beyond normal wear and tear allowed by statute.

Move-in Fees

A landlord may choose to collect a move-in fee for necessary services to prepare the rental unit for a new tenant. A move-in fee is a specified dollar amount that is not refundable to the tenant. A move-in fee is money that is paid directly to the landlord and is immediately available to the landlord to administer the funds as the landlord chooses.

Pet Fees, Deposits, Rents

A landlord may require that tenants with pets to pay a pet deposit, and a one-time nonrefundable pet fee at lease signing. Some landlords may require a monthly pet rent which is added to the tenant’s monthly rental amount.

Late Rent Fees

Late fees for past due rent are charged by a landlord to provide incentive to tenants to pay timely rents. The issues of late fees and related statutory grace period for rent payments are addressed by many state statutes. The landlord’s lease agreement must provide the details for late fee amounts, when the late fee applies, and any other applicable terms and conditions.

Utilities Fees

For rental units that do not have separately metered utilities, a landlord may charge a monthly fee to the tenant for utility use, such as water, sewer, trash, or cable service.

Amenity Fees

Some landlords may charge an amenity fee for tenant use of property amenities such as laundry facilities, gym/fitness center, or swimming pool. In some states a landlord is prohibited from charging an amenity fee. If applicable, the landlord’s lease agreement should clearly disclose terms and conditions for use of property amenities.

Miscellaneous Fees

There can be a variety of add-on fees that may be charged to a tenant for optional services or as additional requested services outside of landlord provided services. Add-on fees could include parking registrations, permits and monthly fees, storage units or lockers for tenant personal use, lock-out charges, key replacements or additional keys, replacement of lost gate or pool keys or openers, carpet cleaning fee, or bulk trash removal.

There are many other fees and deposits that landlords may use in their property management operations that are specific to their unique properties and the local rental market.

Note that the information discussed above is not nor intended to constitute legal advice. Information presented is deemed current as of this writing but is not all inclusive of all rents, fees and deposit requirements or regulations by state or local laws. Landlords should conduct their own due diligence to research applicable laws and implement fully compliant policies and practices.