The Application of Fair Housing Act Standards to the Use of Criminal Records by Landlords for Housing Decisions

The Fair Housing Act prohibits discrimination in the sale, rental, or financing of dwellings and in other housing-related activities on the basis of race, color, religion, sex, disability, familial status or national origin.

The U.S. Department of Housing and Urban Development (HUD) recently issued guidance concerning how the Fair Housing Act applies to the use of criminal history by providers or operators of housing and real-estate related transactions. Specifically, the guidance addresses how the discriminatory effects and disparate treatment methods of proof apply in Fair Housing Act cases in which a housing provider justifies an adverse housing action – such as a refusal to rent or renew a lease – based on an individual’s criminal history.

As background, Department of Justice statistics show nearly one-third of the U. S. population has a criminal record of some type. While individuals with criminal records are not currently a protected class under the federal Fair Housing Act, the use of criminal history-based barriers to housing have a statistically disproportionate impact on minorities, which are a protected class under the Act. Specifically, racial and ethnic minorities, particularly African-Americans and Hispanics, are arrested, convicted and incarcerated at rates disproportionate to their share of the general population.

Discriminatory Effects Liability

Discriminatory effects liability holds that a policy or practice may be considered discriminatory if it has a disproportionate adverse impact against any group based on protected classes when there is no legitimate, nondiscriminatory business need for the policy or practice.

A landlord’s policy or practice that restricts access to housing on the basis of criminal history, if it does not serve a substantial, legitimate, nondiscriminatory interest of the landlord, or if such interest could be served by another practice with less discriminatory effect, has a disparate impact on individuals of particular race, national origin, or other protected class and is unlawful under the Fair Housing Act.

When a landlord’s policy or practice has an unjustified discriminatory effect, the landlord has violated the Fair Housing Act even when there was no intent on the landlord’s part to discriminate. A facially neutral policy or practice that has discriminatory effect is unlawful if the policy or practice is not supported by sufficient legal justification.

A three-step burden-shifting standard requiring fact-specific analysis is required to assess discriminatory effects liability.

Step 1. Evaluating whether the criminal history policy or practice has a discriminatory effect

A landlord may offer evidence to refute a claim that the landlord’s policy or practice causes a disparate impact on one or more protected classes.  Evidence such as applicant data, tenant files, demographic data and local criminal justice data may be relevant to determine whether there is reasonable cause to believe the challenged policy or practice causes disparate impact.

Step 2. Evaluating Whether the Challenged Policy or Practice is Necessary to Achieve a Substantial, Legitimate, Nondiscriminatory Interest

The landlord has the burden to prove that the challenged policy or practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest of the landlord. Such interest may not be hypothetical or speculative, meaning that the landlord must provide evidence proving both that the landlord has such an interest supporting the challenged policy and the challenged policy actually achieves that interest.

Protecting property and the safety of residents are usually considered substantial and legitimate landlord interests provided they are the actual reasons for the policy or practice. The landlord must however prove through reliable evidence that his policy or practice regarding housing decisions based on criminal history actually does assist in protecting resident safety and/or the property. In order to prove his interest a landlord cannot use generalizations or stereotypes that an individual with an arrest or conviction record is a greater risk than an individual without a record.

Exclusions Because of Prior Arrest

Arrest records do not provide a reliable basis for assessment of the individual’s potential risk to resident safety or property. Records may be incomplete and fail to indicate whether the individual was prosecuted, convicted, or acquitted. A landlord who denies access to housing to individuals on the basis of arrests not resulting in conviction cannot prove that the exclusion actually assists in protecting property or resident safety.

Exclusions Because of Prior Conviction

Generally a record of conviction is sufficient evidence to prove criminal conduct of an individual. However, landlords whose policy or practice excludes individuals with prior convictions must still be able to prove that the policy or practice is necessary for a substantial, legitimate, nondiscriminatory interest. A blanket prohibition on any individual with a conviction record, regardless of when the conviction occurred, the details of the individual’s conduct, and what the individual has done since then, will not meet the burden of proof.

A landlord whose policy or practice excludes individuals with only certain types of convictions must still prove that the policy or practice is necessary to serve the legitimate nondiscriminatory interest. The landlord’s policy or practice must accurately distinguish between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not. A policy or practice that fails to take into account the nature, severity, and timeframe of an individual’s criminal conduct is unlikely to be proven necessary to serve a substantial, legitimate, and nondiscriminatory interest of the landlord.

Statutory Exemption Exclusion Because of Illegal Manufacture or Distribution of a Controlled Substance

A landlord is not held liable under the Fair Housing Act for excluding individuals who have been convicted of specified drug crimes of illegal manufacture or distribution of a controlled substance regardless of any discriminatory effect resulting from such a policy.

Step 3. Evaluating Whether There Is a Less Discriminatory Alternative

If a landlord successfully proves his policy or practice is necessary to achieve substantial, legitimate, nondiscriminatory interest, the plaintiff then bears the burden that such an interest could be served by another practice that has a less discriminatory effect. Proving a less discriminatory effect might include an individualized assessment of the facts and circumstances surrounding the criminal conduct, taking into account the age of the individual at the time of the conduct, evidence of satisfactory rental history before and/or after the criminal conduct, and the individual’s rehabilitation efforts.

Conclusion

Landlord policies or practices used to make housing decisions that exclude individuals based on criminal history must be tailored to serve the landlord’s substantial, legitimate, nondiscriminatory interest. Consideration must be given to such factors as the type of the crime and the length of the time since conviction. Where a policy or practice excludes individuals with only certain types of convictions, a landlord will still bear the burden of proving that any discriminatory effect caused by such policy or practice is legally justified.

The Fair Housing Act prohibits both intentional housing discrimination and housing practices that have an unjustified discriminatory effect because of race, national origin or other protected characteristics. While the Act does not prohibit housing providers from appropriately considering criminal history information when making housing decisions, arbitrary and overbroad criminal history-related bans are likely to lack a legally sufficient justification. Thus,” a discriminatory effect resulting from a policy or practice that denies housing to anyone with a prior arrest or any kind of criminal conviction cannot be justified, and therefore such a practice would violate the Fair Housing Act.”

Question

Is there a particular format required for Denial of Application to Rent letter?

Answer

The actual name of the document required under the federal Fair Credit Reporting Act (FCRA) is “Adverse Action Notice” and the notice is only required when the landlord uses a “consumer report” as defined under FCRA.

An adverse action is any action by a landlord that is unfavorable to the interests of a rental applicant. It includes not only a landlord’s denial of a rental application but also a landlord’s action that imposes a burden not required of all tenants. Common adverse actions by landlords include:

• Denying an application
• Requiring a co-signer on the lease
• Requiring a deposit that would not be required for another applicant
• Requiring a larger deposit than might be required for another applicant raising the rent to a higher amount than for another applicant

The circumstances of a rejection determine what you must do by law to notify an applicant that his application has been rejected.

To be covered by the FCRA a report must be prepared by a credit reporting agency (CRA). The most common type of CRA is the credit bureau. Landlords using consumer reports for evaluation of rental applicants must follow the provisions of the Fair Credit Reporting Act (FCRA).

Whether verifying employment and previous landlord references is covered by the FCRA depends on who does the verification. A reference verified by the landlord or by the landlord’s employee is not covered by the Act; a reference verified by an agency hired by the landlord to do the verification is covered.

The landlord must provide the notice if the adverse action in any way is based on a consumer report that played a factor in the landlord’s action, even though its action is based primarily on an applicant’s income or prior reputation as a tenant.

Although there is no set format for the notice, a notice of the adverse action provided to the consumer must include:

• The name, address and telephone of the CRA that supplied the consumer report including a toll-free telephone number for CRAs that maintain files nationwide,
• A statement that the CRA that supplied the report did not make the decision to take the adverse action and cannot give the specific reasons for it, and
• A notice of the individual’s right to dispute the accuracy or completeness of any information the CRA furnished, and the consumer’s right to a free report from the CRA upon request within 60 days.

Although the law can be interpreted to allow oral adverse action reports, it is best to mail an adverse action letter to the rejected applicant using the USPS with a Certificate of Mailing to prove it was sent.

Landlords who fail to provide required disclosure notices potentially face legal consequences. The FCRA allows individuals to sue landlords for damages in federal court. In addition the Federal Trade Commission (FTC), other federal agencies and the states may sue landlords for non-compliance and get civil penalties. However, a landlord who inadvertently fails to provide a required notice in an isolated case has legal protections, so long as he can demonstrate “that at the time of the violation he maintained reasonable procedures to assure compliance” with the FCRA.

The above discussion relates only to federal law. As for many property management issues, landlords must also understand and abide by any more restrictive consumer credit laws that might exist in their particular states.

Question

What exactly is tenancy-at-will?

Answer

Basically, a tenancy at will is a tenancy that can be terminated at any time by either the tenant or the owner (landlord). It exists without a contract or lease, and is unspecific in duration or the exchange of paymentVarious legal dictionaries have somewhat different definitions of “tenancy-at-will” and the definition has changed over time and currently has somewhat different meanings and rules among the various states. Also, in modern times such a tenancy is usually regulated in some manner by statute and/or court decisions, with it actually being essentially prohibited for all practical purposes in some jurisdictions due to such regulation.

In olden times a tenancy-at-will was basically the occupation by someone of real property owned by another (the landlord) until such time as the landlord gave notice of termination of the tenancy. It was a tenancy that the landlord could terminate at any time and for any reason. Over time many jurisdictions have extended the definition to give the tenant the same or somewhat different right of termination. So, now, in most jurisdictions a tenancy-at-will is a tenancy which either the landlord or the tenant may terminate at any time by giving “reasonable” notice if the notice period is not defined by statute or case law.

A tenancy that explicitly exists at the will of the tenant (e.g., stating “for as long as the tenant desires to live on this land”) generally does not mean that the landlord may terminate the lease in the same manner. Instead, in many states such language might be interpreted as granting the tenant a life estate.

One again, although the advance notice period could long ago be of any length, now, even if not covered by statute or case law, it probably should be at least a reasonable amount of time in order to pass muster with a judge, with the minimum period being reasonable. When a notice period is not defined by the lease agreement or state law, some degree of safety is probably provided by giving at least 30 days’ notice. A tenancy-at-will is created by agreement between the tenant and the landlord, but it cannot usually be transferred by the tenant to someone else since the landlord controls the right to occupy.

A tenancy-at-will usually results when a tenant occupies rental property with the landlord’s consent and makes rent payments in the absence of any formal lease agreement (oral or written) or when a family member is living on the property. A tenancy-at-will can also be created when a tenant has the landlord’s permission to stay on the property past the expiration of the rental agreement without a formal extension or renewal of a lease agreement when the agreement has no provision for such continuation beyond the date of expiration. The laws of many states make such a case revert to a month-to-month tenancy.

A tenancy-at-will usually become ineffective (is broken) when either the landlord or tenant dies; the landlord sells or otherwise transfers his interest in the property; the landlord leases the property to another; the tenant commits waste against the property; the tenant attempts to assign his tenancy; the tenant operates a criminal enterprise on the property; or that tenant ceases utilizing the property (vacates).

A tenant-at-will is different from a “holdover tenant” in that the former has permission of the landlord to stay beyond the expiration date of the agreement, while the latter usually does not. A tenant-at-will is usually required to continue making rent payments as long as he is allowed to remain.

A tenancy-at-will comes to an end when either the landlord or the tenant acts in a way that is inconsistent with a tenancy.

For example, in “olden days” the changing of locks by the landlord would indicate the end of the tenancy. However, in most jurisdictions, a landlord is prohibited from using such a “self-help” remedy to terminate a residential tenancy. Doing so would usually constitute a “constructive eviction” and expose the landlord to liability, either civil or criminal or both.

Since tenancies-at-will are now governed by law in many states, this means that a state’s landlord-tenant law now usually applies to tenancies-at-will, including eviction laws and security deposit laws. For example, if the tenant-at-will fails to pay rent, the landlord must demand possession and immediately file in court a complaint for possession.

Recordkeeping for Landlords

Accurate and detailed record keeping is an essential business practice for landlords. Whether for a single rental property, multi-family properties, or multiple properties, good records and good organizational practices contribute to more effective property management. In turn, a reliable and complete record keeping system provides the data for business financials, tax reporting, and functions as a risk management tool against tenant claims of discrimination or rental disputes.

As with many operational issues, the landlord must understand what is required for regulatory compliance and for business analytics and develop a record keeping system accordingly. The system may be a manual ledger or an integrated software program. The complexity or simplicity of a system is a business decision that matters only in that the system must work for the business. The system must be designed to handle current business operations yet have capability to handle future business growth.

A good system works for the landlord in that it records the necessary data in a format and style that is appropriate to the business model and adequate for compliance with business and tax reporting requirements. The record keeping system must be able to track income and expenses and provide supporting documentation as needed to prove tax returns. Additionally landlords should keep good tenant records to support rental operations and as documentation for compliance with federal, state, and with local fair housing laws and landlord-tenant statutes.

If a landlord has employees, there are specific record keeping requirements including employment tax returns and payroll reporting.

Documentation retention varies according to the type of record and applicable compliance requirement. As examples, real property records for purchase and capital improvements are kept throughout the ownership and thereafter for tax record retention periods while records relating to any legal actions should be retained indefinitely. Tenant records or employment records may follow retention guidelines per statute of limitation periods or as specified by other requirements.

While each business may organize records in a format that supports their specific business needs, typically landlords maintain records for property ownership, tenant information, property/unit information, and tax reporting.

Ownership Property Records

For real property, records relating to the purchase of the property should be kept through the sale of the property and related tax return retention period. Documents may include:

• purchase offer,
• contract,
• closing documents including inspections, appraisal, and title policy,
• property deed,
• loan documents,
• tax records including tax bills, payments, and special tax assessments, insurance policies, and
• any other documents that relate to the purchase and sale of the property.

Additionally the seller should have furnished the original leases of tenants currently living at the property, the original security deposit receipts, manuals and instructions for appliances or other conveyed items, copies of property/unit maintenance and repair receipts, copies of fire and safety inspections, and the buyer should ensure that escrow closing statement shows the correct credit to the buyer for all deposits held by the seller.

Tenant Records

Maintaining complete, detailed, and up-to-date tenant information is essential to document the individual’s tenancy, the landlord’s compliance with legal obligations, and more likely to prevail in any legal conflict with the tenant. Having good documentation can be invaluable in proving a defense against a tenant’s claims or prove the landlord’s case in a court action, such as an eviction.

A good tenant file may include the following documents:

• Property address/unit,
• Rental application,
• Copy of tenant’s photo identification document,
• Reference checks,
• Credit report,
• Background check (if applicable by statute),
• Employment check,
• Income verification,
• Signed lease agreement,
• Contact information,
• Vehicle information,
• Emergency contact information,
• Cosigner/Guarantor agreement if applicable,
• Monthly rent amount,
• Rent due date,
• Security deposit amount,
• Other fees, deposits,
• Lease agreement term – beginning and ending dates,
• Signed Move-in checklist,
• Signed receipt of keys,
• Correspondence,
• Tenant requests,
• Repair and Maintenance records,
• Inspection reports,
• Notices and warnings, and
• Notices of request for landlord entry.

The above list of documents follows customary tenant application/screening/move-in practices. Maintaining adequate records is a critical risk management tool for protecting the landlord’s business.

As a good business practice, any form of landlord-tenant interaction should be documented in writing to provide a paper trail of discussions, agreements or events between the landlord and tenant.

Rental Unit Records

Records should be maintained for each separate rental property detailing income and expenses. This information will be used for financial analysis and tax purposes. Complete, accurate, and detailed information will be needed to prove business tax returns.

Tax Records

For tax purposes landlords need a record keeping system that provides a record of rental income and expenses with supporting documentation for each property as reported on Schedule E of the tax return. If the landlord is audited by the IRS, the landlord must have a paper trail that can prove the expense deductions are legitimate.

Receipts and other supporting documentation should be kept secure yet accessible. A good business practice is to regularly backup and store copies of all documentation at an off-site location in case of emergency such as burglary or fire, computer failure, or natural disaster.

A landlord’s record keeping and accounting system for income and expenses can be quite basic. A basic accounting system only requires that the landlord keep a rent roll, a maintenance log, a check register, and all bills and receipts.

Rent Roll

A typical rent roll lists the address with building/unit number, type of unit and square footage, tenant name, move-in and move-out dates, lease term and expiration date, security deposit amount, rent amount, other income (e.g. storage locker), other charges (e.g. late fees), amount paid, and balance due. The rent roll records the date rent was received, the amount paid, the check number or other specifics of payment, and the name of the account holder.

A landlord is expected to have a receipt and deposit system for all collected rents. In case of an audit, the IRS is likely to want to trace all deposits. This means that they will want to know where all the money came from and will want to know what happened to all the rents received, or should have received. The better the landlord’s records, the less like IRS auditors are to look for fraud or errors.

Maintenance Log

A landlord should keep good records for all maintenance and repairs to the property. A maintenance/repair log should record when the work was done, who did the work, what materials were used/purchased, and the manner of payment. The landlord should document tenant requests for maintenance and keep all correspondence regarding maintenance and repair work.

A record of tenant maintenance requests and timely resolution can reduce the amount of expensive legal costs in the event of accidents to tenants or their guests on rental property. Good maintenance records help prove landlord compliance with habitability laws and property inspections.

Check Register

A landlord may find that a check register with good detail provides much of the record keeping necessary for his business and tax reporting.

Every check should be coded with details of the expense – the familiar who, what, when, and why notations. Every deposit of income should contain the same kind of information. The same register can be used to record details of cash income and cash disbursements. A separate business checking account rather than comingling personal and business deposits and expenditures allows for better organization of business income and expenses and provides details if needed for audit purposes. It can also avoid an auditor seeing other issues regarding the landlord’s personal life, some of which may result in other problems for a tax payer.

Bills and Receipts

Landlords should retain all receipts and document all expenses incurred for rental property operations, including all equipment, fixtures, or services. For tracking and auditing purposes all expenses should be paid by check, credit card, or a documented transaction proving date, time, and amount of expense. Because business records are so important to surviving an audit, landlords must keep all bills and receipts for at least the period of time when the IRS can do an audit.

As long as fraud is not involved, this means that records must be kept for at least 3 years after the return was filed. There is no time limit when fraud is involved.

Some expenditures cannot be fully deducted in the year a cost was paid, that is, they are not deductible expenses. The cost of these items must be depreciated, that is, spread over a number of years. Landlords should familiarize themselves with the rules and procedures for depreciation as found in certain IRS publications or consult with appropriate tax professionals for guidance on specific circumstances.

Question

If an unmarried couple wants to rent our rental home can we have only the man who is working sign the lease? We don’t want to have the live-in lady to have her name on the lease in case the boyfriend leaves as she has no income. If her name isn’t on the lease and he leaves her we could then ask her to leave, but if her name is on the lease then it would be difficult to ask her to leave and she has no means to pay the rent. Also can we refuse to rent to unmarried couples?

Answer

In my opinion, there is almost never a reason to not have every adult resident sign a lease. On the contrary, there are numerous reasons why every adult should be required to sign, some of which are discussed herein.

Federal, state, and local fair housing laws protect against housing discrimination and refusing to allow the lady to sign the lease could be considered a violation of law in some jurisdiction. Before proceeding you would certainly want to research the latest interpretation of fair housing laws at the federal, state, and local levels to determine if there is an applicable statute protecting unmarried couples from housing discrimination, but the absence of an explicit statute doesn’t protect against a discrimination claim. There may be court decisions that apply or the judge that hears such a case may decide to make new case law. I doubt that many, if any jurisdiction allows a landlord currently to use unmarried status itself as criteria for refusing an application. If allowed by law and your rental standards you must be sure to apply your standards to all applicants. Each and every applicant must be screened using the same rental criteria, in the same manner, every time.

However, you probably wouldn’t prohibit a wife from signing the lease along with the husband even though she had no independent source of income. I think you are better to have the lady on the lease even if she does not qualify individually. If the  man disappears or dies and she stays on without paying the rent, refusing to vacate, you would have no way to regain possession of your rental except by giving notice to pay or quit and to go through with an eviction. If the court considered he to be a guest and not a tenant, because she hadn’t signed the lease agreement you might not be able to get a judgment against her for unpaid or even damages for which her boyfriend was responsible, but not her, you may be out all unpaid rents and the unpaid damages. This is true for two or more women or men, where one is not a signer of the lease agreement.

At a minimum, landlords should require that each applicant, no matter the relationship to other tenants:

• Be      of legal age (18, 19, or 21, depending on state) or an emancipated minor,
• Complete      and sign a rental application,
• Provide      adequate proof of identity, with at least two forms of personal      identification, with at least one being a government-issued photo ID,
• Sign      an authorization of release of personal information form for credit      reports, employment, rental history, eviction report, and criminal history,      and
• Sign      the lease agreement.

Every occupant, age of maturity or emancipated (including all spouses), should be named on the lease agreement and be required to sign it. In the event one occupant defaults, you then have recourse against the other tenants The fact that one tenant has no income or assets at the time of application does not mean he/she cannot be collected from in the future – he/she may later be employed, win the lottery, or marry someone of significant financial status. Judgments against a person who had no income or assets at the time the judgment was obtained may be collectable for many years later and in other states. And if the person seeks credit at a later date (including when applying to rent) provides leverage for payment because credit grantors often require payment of unpaid judgments as a condition of granting credit.

If the boyfriend leaves, you could suggest that you would allow the lease to be broken without penalty, but this should be for the purpose of helping her, avoiding any words that suggest violation of a fair housing law. However, if she wishes to stay and later defaults on the lease, but retains possession, you will have to legally evict her or any other person who has moved in, potentially costing you the same time, money, and stress as if she had been a wife, perhaps even more. But this is no different than when any tenant does the same thing.

Again, having even the unemployed person(s) sign the lease assures the ability to obtain a judgment on more than one person. In general, the more people who can potentially be held liable for rent and damages, the better the chance that the landlord will eventually collect what’s owed.

One final issue; if you refuse her as a tenant based on her financial condition, maybe the only safe reason, you would probably need to provide an “Adverse Action Notice” as required under the federal Fair Credit Reporting Act (FCRA) is “Adverse Action Notice” if a “consumer report” as defined under FCRA was obtained..

Landlord Legal Entry to Rental Premises

Most aspects of landlord tenant relationships are regulated by state statutes and local laws including, in many states, the landlord’s access to rental property. In addition to statutes, the landlord’s lease agreement customarily contains language that details the landlord’s right to entry and notice requirements.

The lease agreement governs the landlord-tenant relationship. It transfers possession, use and enjoyment of the property from the landlord to the tenant for a specific period of time and for a stated amount of rent. The lease agreement contains mutual dependent warranties – the tenant’s promise to pay rent and the landlord’s imposed obligation to provide habitable premises.

Both the warranty of habitability and the closely related tenant right of the covenant of quiet enjoyment come into play in the issues of the landlord’s access to the rental property and the tenant’s right to privacy.

The implied warranty of habitability is a legal doctrine that in most states requires landlords to offer and maintain leased premises in a safe and sanitary condition fit for human habitation for the duration of the lease.

The covenant of quiet enjoyment ensures the tenant that during his tenancy, the tenant’s use and enjoyment of the dwelling unit will not be disturbed by others including the landlord. The covenant between landlord and tenant provides the tenant with the right to exclude others from the premises, the right to peace and quiet, the right to a clean and habitable environment, and the right to basic services.

The rental unit is still owned by the landlord as his legal property and the landlord retains a legal right to enter the premises under certain circumstances. For compliance with habitability responsibilities, a landlord can request access to the rental unit as needed for inspections and repairs in order to make sure the property is safe and well maintained.

While ownership of the property and possession of the property are separate matters, at times such matters can create landlord-tenant tension when the landlord requires access to the rental unit and the tenant views the landlord’s entry as a violation of privacy. Generally in communication and discussion with the tenant regarding the business necessity for entry, the landlord, following statutory requirements or common business practices, is granted access to a tenant-occupied property. The tenant should be reassured that the landlord, or the landlord’s agent, will remain in the tenant’s rental unit only for the amount of time required to complete the task, inspection, repair, or showing.

There can be some landlord behaviors that are considered too invasive of the tenant’s right to privacy and/or intrusive to the tenant’s enjoyment of the premises. When the landlord requests frequent inspections not warranted by business purposes, conducts inspections or requests access outside of reasonable hours, or otherwise uses entry to harass a tenant, the landlord’s behaviors violate the tenant’s right to privacy. The landlord cannot “just drop in” or otherwise enter the tenant’s unit without the express permission of the tenant except in the case of emergency.

Many states cover the issue of landlord access to rental property by statute, specifying circumstances when a landlord may enter the rental premises and the amount of notice required for nonemergency situations.

In the event of a true emergency a landlord can enter the rental premises without giving the required notice. A true emergency is an event that threatens life or causes property damage if not immediately corrected. A landlord should use both caution and common sense to evaluate a situation for emergency entry. Fire, flooding, or an event caused by a natural disaster might be considered legal justification for emergency entry.

The most common requests for landlord entry to rental units are for inspection, maintenance, or repair. In most states the landlord may access rental property for the business purposes of inspection, repair, alterations, or improvements provided the landlord complies with statutory notice requirements. This could include access to the rental property for contractors, tradespersons, or service technicians. The conditions for notice requirements and reasonable hours of access apply for any access to the rental premises.

Generally the landlord gives written advance notice to the tenant of the date and time for entry. If there is no state statute regarding landlord entry and tenant notification, the landlord should follow a guideline of reasonable notice to the tenant and reasonable times for entry. The landlord’s lease agreement should contain a clause that details statutory requirements and the landlord’s policy and procedures for landlord entry to the rental premises. As an example, a lease clause may state:

Landlord or his Agent will not enter Tenant’s dwelling unit without notice except in the case of emergency. Landlord or his Agent will provide Tenant at least 24 hours’ written notice (or as specified in State statutes) of the date, time, and purpose of the intended entry into the dwelling unit. Landlord will make reasonable effort to schedule nonemergency entry during normal business hours, Monday-Friday, or as mutually agreeable to Landlord and Tenant. Tenant agrees Landlord has right of entry to inspect rental property, to make necessary or agreed repairs, to supply necessary or agreed services, or to show the unit to prospective purchasers or tenants.

It would be a good idea to review the lease clause with the tenant during move-in orientation to help the tenant understand the landlord’s business needs for access and the tenant’s role in good property management.

In response to a tenant’s request for maintenance, or for landlord inspection for needed repairs, as long as the tenant agrees to allow entry, the landlord can enter the rental unit even if the tenant is not present. While tenants do not need to be present during the landlord’s entry, a landlord may try to accommodate a tenant’s request to be present. The landlord can make reasonable effort to work with a tenant’s schedule but the landlord is not obligated to delay or postpone tasks.

A best practice is to document in writing all requests for entry and corresponding tenant permissions for entry. Written notices provide details of the nature of the request, date and time of entry and serve as a risk management practice in the event of a misunderstanding.

In most states the landlord has the right to show the rental property to prospective tenants or purchasers. A landlord will need to research his/her state’s law regarding proper notice procedures before requesting access to the rental property for showings.

A tenant may have reason to leave the rental property for an extended period of time. Many landlords require the tenant to notify the landlord if the tenant intends to be absent from the property for some period of time, for example, a period of 7 days or more. The landlord will need to protect his property if there is an extended vacancy. In some states a tenant’s extended absence from the rental unit allows the landlord to enter premises to inspect for damage or to perform basic maintenance. Other states may not address the issue of tenant extended absence. In an emergency the landlord can enter the premises without notice in order to correct an immediate threat. A landlord should conduct research into the state laws to understand if entry is allowed and under what circumstances of a tenant absence from the rental unit.

In some states if a landlord has credible reason to believe the tenant has abandoned the rental unit, a landlord may enter the rental property to determine the facts of the matter. Reasonable evidence of abandonment may be the absence of the tenant’s personal property or household goods. If the landlord determines that the utilities have been turned off, or the tenant has filed a change of mailing address, the landlord might reasonably conclude that the tenant has abandoned the unit. However before proceeding with cleaning the unit and preparing to re-rent the unit, the landlord must be sure the tenant has voluntarily relinquished his tenancy by some action by the tenant such as return of keys or the removal of all or most personal property. Without direct evidence that the tenancy has ended, the landlord may need to file an eviction action against the tenant to regain legal possession of the rental unit and avoid the risk of a lawsuit by the tenant.

If a tenant refuses landlord’s notice to enter, provided the landlord has complied with all requirements by state laws, does the landlord have a course of action? Certainly it can depend upon the circumstances of the landlord request and the tenant refusal, but in general the landlord has the legal right to peacefully enter the rental premises to conduct his business during reasonable hours. Some landlords may choose to bring along a witness to observe the work being done and to counter any claims by the tenant of theft or other inappropriate behavior.

Statutes of some states may allow the tenant to refuse a written request for entry, but could require the tenant to prove justification for his decision. If the tenant repeatedly refuses landlord access to the rental unit, the tenant could be held in breach of his lease for failing to cooperate, thus providing a cause of action for the landlord to proceed with an eviction lawsuit. Under no circumstances should a landlord use force to enter the rental unit. If the issue cannot be resolved satisfactorily, a landlord can obtain a court order to allow access.

Landlord-tenant laws governing a variety of issues vary from state to state. Landlords should conduct due diligence to understand their state’s laws on landlord access to rental property and a tenant’s rights to privacy and quiet enjoyment. Protection of the rental property and protection of rights are mutual landlord-tenant obligations.

Question

The tenant of one of my units vacated as per the lease agreement, but left without making any attempt to clean. In addition, the carpet is seriously stained and otherwise damaged in several spots. Also, walls and blinds are damaged. I have a non-refundable cleaning deposit in addition to a security deposit. What can I charge the ex-tenant against his deposits?

Answer

Some states do not allow a separate cleaning deposit and some states prohibit making it non-refundable. Technically, any “deposit” is by definition potentially refundable if the tenant meets the terms of the lease agreement. In states where a non-refundable amount is allowed, it should be called a “fee” rather than a “deposit.” Finally, some states that allow other than a “security deposit” still limit the maximum total of all amounts collected to the maximum amount for a security deposit. For example, in some states a “cleaning fee” or a ”pet deposit” of $200 plus a “security deposit” equal to two months’ rent would exceed the legal limit if state law limits a security deposit to two months’ rent. I mention these potential issues because a knowledgeable tenant could use collection of excess deposits against the landlord when disputing the deductions taken from his deposits and might actually collect damages from the landlord if the matter went to court.

I’ll assume that a cleaning deposit/fee is allowed in your state, that it can be non-refundable, and that his rent was paid to the date of vacating (as you made no mention of rent being owed). If both rent and damages are owed, it can sometimes be important regarding the order in which deductions are taken from amounts held by the landlord.

In your case and under my assumptions you should apply all cleaning costs first against the cleaning deposit/fee amount. The reason for this is that some states’ laws state that if the amount of a cleaning deposit exceeds the cost of cleaning (as the term is generally understood) the excess cannot necessarily be applied against damages that are not considered cleaning. In such a case, the excess of the “cleaning deposit” must be refunded to the tenant. This fact is another reason that the amount collected for cleaning be called a cleaning “fee” rather than a cleaning “deposit” when such a fee is allowed by the particular state.

Absent a law that requires refunding of excess cleaning deposit amount, any excess could probably legally be applied against other items including unpaid rent and damage. If the entire cleaning amount collected is not enough to cover all cleaning costs, the excess cost would next be claimed against the security deposit.

Actual damages, including carpet and blinds but not including “normal wear & tear” would then be charged against the remainder of the security deposit. Damages in excess of the remaining deposit amount may be recoverable via a lawsuit.

It is important to understand that you cannot charge the tenant for the total cost of replacing the entire carpet in the unit. There are two different issues regarding this issue. First, depending on the floor plan and the location of carpeting, it may be considered acceptable to replace carpeting in only certain rooms. Second, wherever carpeting is replaced you cannot charge for the full cost of carpeting, but must allow for depreciation.

The percentage of cost of replacing damaged carpet that may be charged against the tenant is determined by dividing the number of years the carpet has been in service (including the period the unit was occupied by the tenant who damaged the carpet) by the useful life of the carpet. There is more than one number that might be justifiable for useful life, but it is usually least arguable to use the number of years warranted by the manufacturer.

As examples, assume a carpet that the manufacturer had warranted for 15 years. If the carpet was 10 years old when the tenant vacated the unit, the tenant can be charged 5/15 = 33.3% of the replacement cost. If the carpet had been new when the tenant moved in a year earlier, the tenant can be charged 14/15 = 93.3% of replacement cost. If the carpet was 14 years old when the tenant moved into the unit and the tenant remained for one year or more, the tenant cannot be charged any part of the cost of replacement.

Similar considerations must be given to window coverings, appliances, and other components of a rental that would be considered capital items (have a typical useful life of longer than a year) when they require replacement rather than repair.

Charges for damages to painted surfaces can depend on a number of factors, including specific terms of the lease agreement and whether the “damages” are actually “normal wear & tear” for which the landlord cannot charge a tenant.

Landlords should not try to charge a tenant for replacement when a repair can fix the problem. When charges for damages end up in court the judge is usually concerned that the landlord acted legally and was also fair and reasonable.

Finally, to avoid penalties that are potentially significant in some states, landlords should always provide detailed accounting (including documentation) of charges against deposits and do so within the period allowed by state law for return of deposits and/or an accounting of amounts not returned.

Question

I’m unable to find any clause in the lease agreement form I use that deals with “early termination.” Is it fair to ask for the remaining months’ rent if tenant has to break the contract before the 12 months of lease expires?

Answer

It is not a question of fairness. Both signatories to the lease agreement, landlord and tenant, signed a binding contract that stated terms acceptable to both at the time the document was executed. Neither the landlord nor the tenant can unilaterally terminate the lease during the specified lease term. Even a month-to-month lease requires a notice period of at least 30 days for either party to terminate the lease, with the law in some states requiring even longer notice by the landlord under certain circumstances.

A tenant who breaks his lease agreement remains liable for the rent during the balance of the lease term. However, unless the tenant pays that amount upon breaking his lease, the landlord will want to find a new tenant immediately because the landlord should realize that he/she may never be able to collect the rent for the remaining time of the lease. Landlords must also be aware of the laws of his/her state. The laws of many states require the landlord to make “reasonable” effort to re-lease a unit as soon as possible after a tenant has broken the lease, taking into account, of course, the time required to both prepare the unit for marketing and the time required to find a new qualified tenant, the latter depending significantly on the then market conditions. This means that the tenant will often not end up paying for the entire term of the lease agreement even when the tenant is held responsible for the entire lease, particularly when the break comes early in the lease. Some states specifically forbid the landlord be paid rent by both the old tenant and the new tenant for the same period.

Most lease agreements, including the ones provided on our Web site, are very basic documents. Such basic agreements do not include every possible clause that might be important for every type of property or that might be desired by every landlord.

During more than 3 decades experience in property management I have generated a significant number of customized lease agreements, for many types of properties, both residential and commercial. I have never had a reason to include a clause that allows the tenant to unilaterally break the lease without penalty.

However, I have many times allowed tenants to break the lease with my permission for a specific reason, for example, a bad tenant for whom I felt early termination would also be beneficial to me even though it might result in an earlier vacancy. In either case, it was very seldom without penalty for the tenant, although the tenant’s penalty was almost always significantly less than that which would have been allowed by law and the lease agreement.

When a particular tenant needs to break the lease due to unexpected circumstances – as examples, employment transfer to a distant location, financial difficulty due to medical expenses, or employment termination – none of which allows the tenant to break the lease – the landlord and tenant are free to negotiate a termination that is acceptable to both parties.

If, for some reason, you really wish to provide for unilateral termination by the tenant in your lease agreement you need to be sure that the conditions are stated in sufficient detail and clarity that will minimize the chances of misunderstanding or disagreement. However, I would strongly suggest that cases which might benefit from mutually acceptable termination are best handled on an if/when needed basis rather than by a clause in the lease agreement.

If there is some reason that the tenant or the landlord anticipates a need for early termination, a month-to-month lease will usually be a better option if agreeable to both parties.

The only scenarios that come to mind regarding the legal need for unilateral termination of a long-term lease by the tenant without penalty has to do with domestic violence problems and for military personnel who are being transferred or deployed under certain circumstances as provided for in federal or state laws. However, some states or municipalities might allow tenants to unilaterally terminate for other circumstances.

Question

I’m having problems with the guest of one of my tenants and need to know what I can do to prevent this guest from coming on to the property.

Answer

What, if anything, you can do about the “problem” guest depends on (1) why you consider the guest to be a problem, (2) what clauses are in the lease agreement that might apply to the situation, or (3) what might be a matter of law in the particular state. Without knowing the specifics of what makes the guest a problem and seeing a copy of your lease agreement I must discuss the issue in generalities.

A tenant is generally responsible for actions of his guests by law and an adequate lease agreement should also so state. If actions of the guest result in violation of a lease clause, the landlord could demand (by written notice) that the tenant correct the problem and prevent it from re-occurring. Failure of the tenant to do so might, depending on the specifics of the problem, be grounds for termination of the lease.

Basically, it is up to the tenant to cease allowing the problem guest on the tenant’s leased premises. A guest causing problems on the property, but not on the tenant’s leased space (including any spaces external to the internal living space that are for the tenant’s sole use – e.g., a yard that is included by the lease) may still be the responsibility of the tenant to correct, but the landlord could instead deal with it by contacting law enforcement if the problem is serious enough to be considered something requiring police action.

A landlord cannot prohibit a guest from a tenant’s leased premises because the landlord doesn’t like the way the guest wears his/her hair, speaks, dresses, etc. The landlord certainly cannot prohibit a guest who is a member of a protected class under federal, state, or local fair housing laws unless clearly non-discrimination issues are involved.

Landlords must try to avoid doing things that result in a tenant’s claim that the landlord has violated the tenant’s “right to private enjoyment” of leased premises.

Question

For the first time since I bought my duplex, the lease term for one of my tenants is nearing the end and wonder if I need to serve the tenant with a notice if I do not want to extend or renew his lease.

Answer

What you need to do to terminate the lease depends on the clauses in your lease agreement and, in a few states it may depend on the law. It can be of benefit that the lease agreement explicitly discusses end-of-lease issues. For example, the agreement may state that the tenant is expected to vacate the unit if an extension or renewal agreement has not been executed by the parties at least some number of days (it should be at least 30) before the ending of the existing lease term.

As another example, the agreement may state that the lease becomes a month-to-month lease if no action has been taken regarding an extension or renewal, the landlord has not given notice of termination, and the tenant holds over beyond the term end. It is usually desirable to include the amount of the rent increase that becomes effective at the end of the current lease’s term when it has not been otherwise determined in advance of the term ending date.

It never hurts to provide a termination notice prior to term end no matter what the lease requires when the landlord desires to have the tenant depart. If you don’t want to extend or renew the lease, the tenant can be so notified. Usually, no reason need be given and it is best to not give a reason that can in any way be considered a violation of fair housing laws. Such a notice can be given at any time prior to term end unless otherwise required by the lease agreement or law, but it should be long enough in advance for the tenant to make plans for moving.