Question

I am a relatively new landlord, only now turning my old home into a rental after having a new home built nearby. What can I ask and am I not allowed ask during tenant screening. Also, is there anything prevents me from making copies of tenant documentation? Finally, can I give the applicant a copy of the credit or other screening reports that I order?

Answer

You can ask for almost any documentation that might be of use in screening as long as it has a reasonable relationship to your determination that the applicant can be expected to pay the rent and take care of your property. In fact, you should make copies of anything that could be of use in (1) tracking down a skipped tenant, (2) collecting a judgment, or (3) defending yourself against a fair housing complaint. However, you must be very careful to request the same information from all applicants in order to avoid any claim that you discriminated against a particular applicant(s) or protected class of applicants.

Obviously, there will be cases where certain information/documentation is not applicable because of reasons not related to protected classes. For example, you would not expect to obtain W-2 forms from a self-employed applicant and you would not usually ask to see tax returns of an applicant who provides W-2s or other evidence of sufficient income to meet the financial obligations incurred under the lease agreement. The best procedure is to provide written information with your application forms about this and other relevant issues related to screening. For the example, you might state in the information that relevant tax return forms must be provided to verify self-employment income and that W-2s and/or other documentation must be provided to verify employment income. This would take care of all three cases – that is: self-employed only, employed only, and those who are both.

You must also remember that federal law, and in some states state law requires that landlord adequately protect personal information collected from applicants and properly dispose of such information when no longer required. The details of protecting and disposal of personal information is not directly within scope of your questions, but is readily available from the Federal Trade Commission’s (FTC) website.

Regarding providing a copy of credit reports or other screening reports, the credit reporting agencies recommend you not do so. However, some states require the applicant be provided a copy upon request. You need to check the law of your particular state.

Another issue related to rental housing applications concerns the need to provide to unsuccessful applicants an adverse action notice when an adverse action is taken that is based solely or partly on information in a consumer report as defined by the FTC. The notice 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.

Be aware that certain states have more restrictive consumer credit laws and additional requirements. For example, CA requires the landlord to give a receipt for any fee collected that is greater than a specified amount ($30 or $35 as I remember) and provide the applicant a copy of the credit report when requested.

Be sure you understand which types of screening requires an adverse action notice and which do not, as the penalties can be quite high for failing to provide the notice if required. Landlords who fail to provide required disclosure notices potentially face legal consequences. The FCRA allows individuals to sue landlords for damages in federal court. A person who successfully sues is entitled to recover court costs and reasonable legal fees. The law also allows individuals to seek punitive damages for deliberate violations of the FCRA. 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.

Ending a Tenancy – Part 2

Ending a tenancy should be a matter-of-fact business transaction regardless of whether the tenancy was a periodic tenancy or a fixed term lease with a date certain beginning and ending date. Knowledge and compliance with applicable laws – landlord-tenant, fair housing laws, and consumer protections – will be required to properly plan and prepare for ending a tenancy.

A landlord can terminate a tenancy for a variety of business reasons but cannot terminate a tenancy for discriminatory reasons or in retaliation for a tenant exercising a legally protected right. Discrimination is illegal under federal, state, and local fair housing laws. State and local laws may regulate how a tenancy may be terminated with specific lease language, notice requirements, rent control protections, retaliation remedies or other landlord-tenant obligations and duties.

A lease agreement is a legal contract between landlord and tenant that generally precludes one party from unilaterally ending the tenancy unless there has been a material violation of the lease agreement by the other party. The landlord is obligated to provide the tenant with habitable living conditions and the tenant promises to pay the landlord the stated amount of rent for the fixed term. Typically a lease agreement is for a term of one year. The tenancy under a fixed-term lease agreement will end of its own accord on the expiration date as set forth in the lease agreement.

Provided the landlord is in compliance with applicable statutes and in accordance with the lease agreement language, with proper notice and in most circumstances the landlord is not obligated to renew a tenant’s lease. When the lease term ends, both parties can move on.

Even though the lease agreement clearly states the term of the lease with the expiration date, it is advisable, and a requirement in some states or localities, to give reasonable, written notice to the tenant that the lease will be expiring. This reminder notice, generally at 60 days before the lease expiration date, accomplishes several things. First, it allows the tenant sufficient time to look for another rental unit if either the tenant or landlord does not want to renew the lease. Second, it allows time for the landlord to renegotiate the lease if he would like the tenant to stay on but with different lease terms or rents. Third, it allows time for the landlord to begin planning for the vacancy and possibly shorten the time the unit may be vacant.

At the end of the lease term the tenant has options – he can move out; he can accept a new lease from the landlord with either the same terms or different terms; or he can accept a month-to-month tenancy.

If the tenant does not choose any of the above options, stays beyond the end of his lease term without the landlord’s consent, and the landlord does not accept offered rent from the tenant, the tenant is considered a holdover tenant and the landlord may take action to evict the tenant.

In many states, if the lease has expired but the landlord continues to accept rent, a new month-to-month tenancy will be created with the same terms as the old lease. A new termination notice must be delivered to end the tenancy.

In some states, however, if the lease has expired and the tenant continues to pay rent, a new lease is created for the same length and terms as the old lease. It becomes an automatic renewal of the lease under exactly the same terms as the old lease. Both parties are bound by the new contract agreement. Accordingly, if a change of any lease term is desired by either party, it must be accomplished before the expiration date.

If the lease has expired, a landlord may agree to extend the tenancy for a short period at a prorated rent. A written agreement should be prepared for the tenant’s signature detailing the terms of the agreement.

Some landlords utilize a lease agreement that contains a tenant buyout clause or specifies the terms and conditions for an early termination of the lease. Before utilizing such an agreement the landlord should ensure all lease clauses are in compliance with applicable laws. If the tenant completes the requirements of the buyout or agrees to the terms for an early termination, the tenant obligations cease.

There can be certain circumstances whereby the tenant has legal justification to end his tenancy before his lease expiration date. Most state laws allow a tenant to be released from his/her lease obligations for situations of domestic violence, military service, material violations of the lease by the landlord, or damages to the rental property from natural disasters beyond the control of the landlord. In some states a tenant may be released from his lease obligations because of job relocation or for reasons of health or age.

A federal law, the Servicemembers Civil Relief Act (SCRA) provides for early termination of residential leases for all active duty servicemembers, reservists, and members of the National Guard. Under SCRA, with proper notification to the landlord the tenant, spouse or any dependent listed on the lease agreement can terminate the tenancy without penalty.

In most states if the tenant simply breaks the lease and leaves, the landlord is obligated to minimize damages and re-lease the property as soon as possible rather than leave it vacant and require the tenant to continue paying the rent for the remainder of the lease term.

Recovery for any losses for unpaid rent, property damages, and other expenses incurred due to the default by the tenant that are not recoverable from the security deposit may be sought through a lawsuit.

Determining whether the tenant has actually given up possession can be an issue if the tenant has not given any indication of vacating. A landlord must be aware of any specific requirements by state statute, as requirements vary significantly among states. Some states have statutes that define how a landlord may proceed to recover possession when the tenant appears to have abandoned the premises. When state statutes define procedures, the lease agreement should include the procedures as defined.

For example, a state may specify that the landlord does not have possession absent a specific action such as the keys being turned in. Absent such an action, state law may require that the landlord perform “abandonment” procedures or commence a forcible detainer action (eviction).

Each state has its own laws regarding how a landlord must handle personal property that appears to have been abandoned by the tenant without any certainty that such was the intent. At one extreme, some states do not have a specific law regarding the issue and landlords must only use common sense when deciding what to do. At the other extreme, some states have statutes spelling out detailed procedures for dealing with abandoned property that must be followed even when the lease has expired, the tenant is no longer occupying the premises, and all personal property except for a few items has been removed. These procedures often include the requirement of secure storage of the personal property, specific notifications to the tenant regarding the matter, holding a public sale of the personal property, and accounting for funds realized from the sale.

A tenant who refuses to vacate upon termination of his lease or who fails to correct a noticed default of a material term of the lease agreement, including non-payment of rent, can only be removed through the judicial procedure of eviction.

No matter how the tenancy is being terminated, a landlord should provide a move-out letter to the tenant prior to the termination date. The letter serves to remind the tenants of the terms and conditions they agreed to when they signed the rental agreement. This can be particularly useful in avoiding disputes with tenants at the last minute.

In the end, there are legal procedures that be followed for proper termination of the tenancy including preparation and service of termination notices, security deposit accounting and return, move-in/move-out checklists and regaining possession of the rental unit.

Good attention to detail is as important in the exiting of the tenant as it is in the screening and selection of the tenant.

Question

A tenant in one of my 4-plex units left the place a mess. In addition to not even attempting to do any cleaning, he seriously stained the carpet during his stay and otherwise damaged it in several spots. Also, certain walls and many of the window blinds were 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

First, be aware that any “deposit” is by definition potentially fully refundable if the tenant meets the terms of the lease agreement. Some states do not allow a separate cleaning amount whether called a “deposit” or a “fee” and some states prohibit making it non-refundable. In states where a non-refundable amount is allowed related to cleaning, the lease agreement should call it a “cleaning fee” rather than a “cleaning deposit.”

Finally, some states that allow deposit or fees other than a “security deposit” still limit the maximum total of all amounts collected to be the maximum amount stated for the maximum security deposit in the state’s statutes. For example, in some states a “cleaning fee” of $200 plus a “security deposit” equal to a month’s rent would exceed the legal limit if state law limits a security deposit to one month’s 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 the financial penalty for security deposit violations by a landlord can be significant.

I will assume that a cleaning deposit/fee is allowed in your state and that it can be non-refundable. I will also assume 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 against the cleaning deposit/fee amount. In some states, if the amount of the 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 and the excess of the “deposit” must be refunded to the tenant. This fact is another reason to call the amount collected for cleaning, a cleaning “fee” rather than a cleaning “deposit” when such a fee is allowed by the particular state.

If the entire cleaning amount collected is not enough to cover all cleaning costs, the excess cost would next be applied 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. The reason for ending up with damages potentially exceeding the remaining amount held rather than cleaning is that a judge is more likely to award a judgment for physical damages (e.g., a broken window) that are easily documented via photos, assuming your move-in checklist signed by the tenant shows all windows were in good condition, rather than for a claim that something wasn’t cleaned adequately (e.g., some missed grease in an oven) that can be somewhat subjective and the tenant may be able to convince the judge that the oven was just as dirty when he moved in.

It is important to understand that, technically, you cannot charge the tenant for the total cost of replacing the entire carpet in the unit unless it was brand new when he moved in and there is irreparable damage in every room that is beyond normal wear & tear. There are two different issues regarding this issue. First, depending on the floor plan and the location of carpeting, it may be 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 and it can be proven that the damage did not exist at time of move-in, the tenant can be charged 5/15 = 33.3% of the replacement cost, with the cost perhaps being only for the room in which the carpet is damaged if appropriate. 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 for damaged areas, again depending upon floor plan. 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 because the carpet had no remaining “useful life.”

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 that the “damages” are actually “normal wear & tear.”

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 was 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

My tenant wants to extend her lease. The only item on the old lease that will change is the lease term. Do I have to enter into a new lease, or can I do a short amendment for the existing lease?

Answer

When changes are being made to a lease (or any other contract) you can always either amend the existing contract or create a new document. It is usually best to create a new lease document when the number and complexity of changes being made is significant relative to the overall document. If there have been changes to the lease agreement since the lease was signed, it is often simplest to execute a new agreement rather than update the existing lease agreement. There are no set rules regarding the decision point, but for your case, with only one simple change being made, one would usually do an amendment.

Be sure that the amendment adequately refers to the original lease agreement by date, tenant name, rental unit address, and states that all other terms of the lease remain as before.

Ending a Tenancy – Part 1

Tenants come and tenants go. Ending a tenancy should be a matter-of-fact business transaction regardless of whether the tenancy was a periodic tenancy (usually month-to-month) or a fixed term lease with a date certain beginning and ending date.

However, whether a tenancy ends with nary a whimper or with a big bang may depend on the landlord-tenant relationship, and the circumstances of the departure. A good ending may be the result of a good beginning when landlord and tenant clearly understand their obligations and duties.

There are legal issues that must be dealt with at the end of tenancy including preparation and service of termination notices, security deposit accounting and return, move-in/move-out checklists and possession of the rental unit.

Ending a tenancy can result from events in a tenant’s life that are related to personal or family health, family responsibilities, work relocations, military orders, domestic violence, death, or a voluntary decision to move on. A landlord may have his own reasons why the tenancy should be terminated.

A landlord can terminate a tenancy for a variety of business reasons but cannot terminate a tenancy for discriminatory reasons or in retaliation for a tenant exercising a legally protected right. Discrimination is illegal under federal, state, and local fair housing laws. State and local laws may regulate how a tenancy may be terminated with specific lease language, notice requirements, rent control protections, retaliation remedies or other landlord-tenant obligations and duties.

Depending upon the circumstances a landlord and tenant may need to work together through the legal or social issues associated with events to reach agreement on ending the tenancy. Some events may allow early termination rights for tenants if proper notice and legal procedures are followed. As examples, tenants who enter active military service after signing a rental agreement have a right under federal law and some states’ laws to be released from their rental obligation and victims of domestic violence in some states may have early termination rights and protections from eviction.

The following discussion focuses on some of the issues in ending a periodic tenancy that is month-to-month.

Month-to-month tenancies can be terminated by either the tenant or the landlord with proper notice according to state statute. Most states do not require a landlord to provide the tenant with a reason for termination, but in a few states a landlord must have a just or legally recognized reason by statute for termination of tenancy.

Ending a month-to-month tenancy is a relatively simple matter in most cases and in most states. A landlord provides a written notice to the tenant to move allowing the minimum number of days as required by state law and stating the date on which the tenancy will end. Typically the landlord notice period for terminating a month-to-month tenancy is 30 days, the same amount of notice period as would be required of a tenant to end his tenancy, but in some states the landlord is required to provide a longer notice period, such as 60 days.

The state and local laws where the rental property is located will govern the requirements and procedures for preparing and serving termination notices.

While the typical tenant notice period to terminate tenancy is a minimum of 30 days, in some states and in certain circumstances, the notice period may be less than 30 days or a period that corresponds to the rent payment interval.

Language in the rental agreement must comply with state statute notice requirements for termination. It is a good business practice to require a written termination notice from the tenant that gives the specific date the tenant plans to move out. The written notice provides a means of defense should the tenant not move out as planned and the landlord has already accepted a new tenant.

A tenant may encounter a change of plan that affects his move-out date. If a landlord accepts rent for any period beyond the agreed upon move-out date, the termination notice is effectively cancelled and a new month-to-month tenancy has been created. To terminate this new tenancy a landlord must prepare and serve a new notice to start the process again.

However a landlord may agree to extend the tenancy for a short period at a prorated rent. A written agreement should be prepared for the tenant’s signature detailing the terms of the agreement.

When a tenant fails to give notice in a timely manner (e.g. short notice) but does move out, he is still obligated to pay rent through the end of the required notice period. A landlord in most states has a legal obligation to try to rerent the unit before charging the former tenant for the remaining days of the notice period.

A material violation of the rental agreement by either landlord or tenant may be remedied in different ways. If a landlord fails to comply with his legal responsibilities, as an example, the implied warrant of habitability, a tenant may have the legal right to remedy the situation by moving out without giving the proscribed notice period. A material violation of the rental agreement by a tenant, as examples, failure to pay rent, or causing property damage, may allow a landlord to more quickly terminate the tenancy with a shorter notice period or to evict a tenant if the situation warrants.

While most tenants leave voluntarily and cause little fuss, there are some tenants that will holdover, skip out, or require an eviction proceeding to remove them from the unit. Any of these behaviors will require additional effort on the landlord’s part to end the tenancy and gain possession of the rental unit.

Holdovers

If a tenant stays on after the term of his rental agreement has expired, without the consent of his landlord, and the landlord does not accept offered rent, the tenant is considered a holdover tenant. In effect a holdover tenant is a trespasser. A landlord will need to serve the tenant with a notice to quit and if the tenant does not move out, file an eviction lawsuit

Skips

A tenant may make an early departure and “skip out,” possibly leaving unpaid rent, property damage, or abandoned personal possessions. A landlord has the right to re-take possession when it is certain that the tenant intended to depart for good. In general, a tenant is liable for rent for the remaining term of the rental agreement. In turn, a landlord has a duty to mitigate damages, that is, make reasonable effort to find a replacement tenant. Recovery for any losses from unpaid rent, property damages, and/or certain other expenses incurred due to the default by the tenant that are not recoverable from the security deposit may be sought through a lawsuit.

Determining whether the tenant has actually given up possession can be an issue if the tenant has not given any indication of vacating. Minimizing questionable vacancy issues begins with including in the rental agreement what the tenant must do when vacating and what will happen if the tenant fails to act as agreed.

Personal property of the tenant that is left behind in the unit or on the property can be another issue that will need to be resolved but according to state laws.

Each state has its own laws regarding how a landlord must handle property that appears to have been abandoned by the tenant without any certainty that such was the intent. These laws vary from essentially no rules to extensive procedures that include secure storage and certain legal notices and the procedures requiring several months to complete.

Eviction

A tenant who refuses to vacate upon termination of a month-to-month tenancy or who fails to correct a noticed default on a material term of the rental (including non-payment of rent) can only be removed through the judicial procedure of eviction.

Move-Out Letter

No matter how the tenancy is being terminated, a landlord should provide a move-out letter to the tenant prior to the termination date. The letter serves to remind the tenants of the terms and conditions they agreed to when they signed the rental agreement. This can be particularly useful in avoiding disputes with tenants at the last minute.

The letter should provide details for the move-out inspection, utility transfers, the return of keys, cleaning of the unit, removal of personal property, and any other tasks expected of the tenant. The tenant will need to provide a forwarding address for any future communication needs including the return of any potential deposit refund.

Exit

As part of the overall property management plan, the same attention to detail that goes into tenant screening and selection should be given to tenant departure. With procedures in place, the exit of a tenant can be handled efficiently and with less stress on all parties.

In a future article we will discuss ending the tenancy of a fixed-term lease. While many issues of ending a fixed-term tenancy are similar in nature to issues discussed above, the legal requirements and remedies may vary.

The discussion of issues in this article does not constitute legal advice and readers are encouraged to perform their own due diligence and seek appropriate advice from qualified professionals as warranted.

Question

One of my tenants moved out without giving written notice. Our lease agreement requires that 60 days’ notice be given for termination of the lease and states that failure to provide such the notice makes the tenant liable for 60 days of additional rent from the date they vacated the unit.

I am looking for language to use in a letter to them.

Answer

You neither indicate the state where the property is located nor whether the lease is month-to-month or for a longer term that was near expiring when the tenant left. Some states or local governments do not allow more than 30 days’ notice for termination of a month-to-month in spite of what the lease might say and some states may not allow a requirement for actual notice of termination at the end of a longer lease term unless the notice requirement is specifically stated in the lease agreement. A lease clause cannot override state law or local ordinance (including rent control ordinances). Assuming that (1) no jurisdiction in which your property is located prohibits requirement for a 60 days’ notice, (2) the relevant lease clause is unambiguous, and (3) the lease agreement required a “written” notice or you can prove that the tenant did not provide an “oral” notice to you, you could simple include the lease clause within your letter.

If they left before the end of the period for which their rent was pre-paid, the additional rent amount should take into account credit for the paid days.

However, many states require that the landlord make “reasonable” effort to find a new tenant as soon as possible and to only charge the old tenant for the period ending when the new lease is effective. Even if the state does not have such a statute, a particular judge might rule that way if the old tenant pursues the matter in court.

Termination Notices

Terminating a tenancy due to a tenant’s material breach of his lease agreement begins by providing the proper notice according to the statutes of the state where the rental property is located. The type of termination notice and the notice period depends upon the circumstances of the breach as well as state laws. Termination due to breach can usually be done with a shorter notice period than the termination of a month-to-month tenancy or waiting for the contracted expiration date of a fixed-term lease agreement.

All states have addressed the termination notice issue by statute and while terminology and notice periods may differ among the states, the substance of the notices will be similar. A termination notice properly prepared and served must be done before an unlawful detainer lawsuit can be filed. Without proper termination of the tenancy an unlawful detainer judgment cannot be issued. The court ordered judgment is required to “evict” the tenant.

A brief discussion of termination notices follows.

Notice to Pay Rent or Quit

A Notice to Pay Rent or Quit demands that the tenant pay rent within a specified number of days and, if not paid, to move out (Quit), ending his occupancy. Since failure to pay rent is the most common reason to commence eviction actions, the Notice to Pay Rent or Quit is the notice most often used.

If delinquency exists in the payment of any portion of rent due, a Notice to Pay Rent or Quit may be served on the delinquent tenant, in most states, as early as the day following the rent due date. Therefore, if rent is due on the first, a notice may legally be served on the next day absent a grace period being specified in the lease.

A few states will not allow service of a termination notice (either a Pay Rent or Quit Notice or an Unconditional Quit Notice) until the rent is a certain number of days late. In these states, tenants enjoy a statutory “grace period” plus the time specified in the Pay Rent or Quit Notice in which to come up with the rent. Of course, any longer grace period in the lease agreement also must be honored

Statutes generally require the landlord to provide the Notice a minimum number of days before the lease can be terminated and a lawsuit for possession filed with the Court. The Notice gives the tenant a few days (3 to 10 in most states, but 30 in a couple) to pay all rent owed or to move out. Some state statutes may require that the Notice be in both English and Spanish.

Notice to Cure or Quit

A Notice to Cure or Quit demands that the tenant comply with one or more terms of the lease agreement (Cure) and, if the tenant does not comply, to end his occupancy (Quit). Notices to Cure or Quit are typically given after a violation of a term or condition of the lease agreement, such as nuisance, waste or illegal use. Usually, the tenant has a set amount of time in which to cure the violation.

Lease agreements often require notice of a breach and specify the form, timing, and manner of service, as well as the tenant’s right to cure the breach. If the landlord complies with the state statute, but doesn’t comply with the lease agreement, the landlord probably won’t be able to get an eviction.

Unconditional Notice to Quit

An Unconditional Quit Notice orders the tenant to vacate the rental premises and does not allow the tenant to cure any violation of the lease agreement. These notices are the strongest of all termination notices and mean exactly what they say. The tenant leaves without an opportunity to pay back rent, correct the lease violation, or otherwise change his behavior. In most states, Unconditional Quit Notices are used when the tenant has:

• Been      late with the rent on more than one occasion,
• Repeatedly      committed a material lease agreement violation,
• Committed      serious waste or damage to the premises, or
• Engaged      in illegal activity, such as prostitution or drug dealing on the premises.

Many states have provisions for all three types of termination notices and specify which notice should be used for a particular situation. Some states may give the landlord a choice of which notice to use, for example, a Pay or Quit or the Unconditional Quit Notice for unpaid rent. The tenant does not have the option to choose a type of notice that would provide him more relief.

In a few states, the Unconditional Quit Notice is the only notice statute for any type of violation including late rent or breach of the lease agreement. A landlord is not required by law to allow a tenant a second chance in curing any breach of the lease agreement, but he can extend that option if he desires.

Many states extend special protections to victims of domestic violence or stalking. A landlord should consult with local law enforcement agencies or the local agencies that provide shelter and support for victims before taking action to terminate a victim’s lease.

In general, the person who signs any of these Notices must appear in court. This person may be one of the owners of the property, one of the partners in an ordinary partnership or one of the general partners in a limited partnership. If the landlord is a corporation, some states require that he must be represented by an attorney in court and it is best if all the papers are executed (signed) by the attorney. Remember too, that the attorney cannot appear in court alone. He must usually be accompanied by a witness having personal knowledge of the facts.

While the above notices are standard and relatively simple forms and are available from a number of sources, it is recommended that, whenever possible, a form provided by the local Court for eviction lawsuits be used. Some states have very specific requirements for notices regarding the language and type and size of the font. The landlord should not try to create his own form or improve upon the court form. In particular, the landlord should not add any language or graphics that threaten unlawful actions or imply an association with any regulatory or law enforcement agency. Such tactics are a violation of the federal Fair Debt Collection Practices Act and other applicable state statutes.

Service of Notices

To be legally effective, the landlord’s notices to the tenant to pay, cure, or quit must be properly served. State statutes are specific about how and when notices must be served. The procedures set out by statute to serve the notices are designed to provide the greatest likelihood that the person so named in the notice actually receives the notice.

The landlord, the landlord’s agent, or any person over the age of 18 can serve notice on the tenant. There are three methods of service generally used in the majority of states. They are:

• Personal      Service
• Substituted      Service
• Posting      and Mailing

Personal service of a notice, handing the notice directly to the named tenant or leaving the notice with him if he refuses to take it, is often the choice preferred by the courts and provides the best method to prove delivery to the tenant. However, the landlord or his server should not force the notice on the tenant’s person.

Although a notice can legally be personally served on the tenant by the landlord, it may not be the best idea for the landlord to do it himself. The landlord’s personal service can lead to a confrontation with the tenant at a time when the problem is best handled by the law and could lead to unpleasantness, even physical violence.

Keeping some distance between himself and the tenant diffuses some of the emotion of the moment and helps to enforce the business relationship. It is of benefit to the landlord to engage the services of another party to serve the notice. Furthermore, if the tenant later claims not to have received the notice, the testimony of an independent party would prove valuable in the landlord’s defense.

It is recommended that each adult occupant of the premises be served with a notice. If the lease agreement was signed by co-tenants, service on only one of the tenants would be sufficient but serving all tenants is the better policy. A co-tenant, if not served, may try to use a defense later on that he had no knowledge of the situation since he was not served.

In many states “substituted” service may be used on another person if attempts to personally serve the tenant at the rental premises or at his place of employment have failed. The person performing the service may leave the notice with a person of “suitable age and discretion” at the rental premises or the tenant’s place of employment with instructions to deliver the notice to the tenant. In addition, to complete the substituted service, a copy of the notice must also be mailed first class to the tenant at the rental address. Service is not complete until both steps have been completed.

The third method of service, posting and mailing, can be used in most states if the notice cannot served personally or by substituted service. The notice is served by tacking a copy to the front door of the rental unit and by mailing another copy of the notice by First Class mail to the tenant at the rental address.

When using First Class mail, it is highly recommended that a Certificate of Mailing be utilized. The landlord or server could always choose to mail the notice by Certified Mail with return receipt requested in order to have additional documentation of service. However, if Certified Mail is used, another copy of the notice should also be mailed First Class with a Certificate of Mailing because that will often satisfy the judge when the tenant refuses to accept Certified Mail and then claims in court that he was not served.

Some states require that additional days be added to the notice period when using mailing service, typically 2 to 5 days.

Whichever method of service is used, proof of service will be required before the lawsuit can proceed.

National Preparedness Month  

September is designated “National Preparedness Month” by the Federal Emergency Management Agency (FEMA) an agency of the United States Department of Homeland Security.

FEMA’s Ready Campaign, a public education outreach campaign, provides information to help the general public, businesses, and communities prepare for and respond to emergencies, including natural disasters.

This year’s theme is “Don’t Wait. Communicate. Make Your Emergency Plan Today.” The campaign urges individuals, families, and businesses to take all necessary steps to develop a practical response plan in the event of emergency.

For business owners, the current campaign underscores the importance of documenting their business operations, property locations, and equipment inventories; backing up business-critical information; and having a trained response team in place. How quickly a business is able to get back to business after an emergency or natural disaster may depend upon the emergency planning and preparation conducted before the event occurs.

Landlords must prepare an inclusive emergency plan for business continuity and the safety and security of tenants. The plan must address a wide range of issues, some of which are unique to rental housing in general, some of which are specific to properties, and some of which must attempt to cover natural disasters and local outages.

There are various types of rental emergency situations that could be potentially dangerous to residents or other individuals, and/or cause potential damage to business property. Experience with renters over the years has made many landlords familiar with Murphy’s Law – what can go wrong – will. This type of real life data can be useful for analysis and evaluation of rental operations and its lessons incorporated into the preparedness plan. The data can identify areas where stronger controls or more communication is needed to lessen a potential risk and perhaps avoid a future emergency situation. The landlord’s lease agreement and written rental policies can be strengthened and provide additional reinforcement and instruction of what to do in problem situations.

Without prior thought and planning for handling emergency situations a landlord may incur liability or charges of negligence if his response is inadequate or untimely. Even with the best plans, emergencies can be costly in resource dollars, time, and efforts. Trying to prepare while the emergency is happening is too little, too late, and too costly.

What does an emergency preparedness plan actually do? An adequate plan can serve a dual purpose. It becomes a landlord’s business preparedness plan and a rental emergency response plan. By analysis, it documents the current business operations, while evaluation of risks helps to project scenarios and outcomes that could be mitigated through directed efforts. The plan addresses those events deemed feasible for the business at hand (natural disasters, property maintenance) but allows for assumptions of unexpected events. It becomes a plan for what you know and a guide for what you hope will never happen.

The detail and complexity of a landlord’s emergency plan is relative to the complexity of his business operations. An independent landlord with a single rental unit may develop his plan in a much different manner than an owner with multiple properties and/or multi-family housing units.

Landlording is a demanding business with multiple issues vying for attention. Problems can arise at any time on any day. Focus is needed to define and clarify situations demanding immediate response. Communication is essential to determine the issue and what response is appropriate. As a business owner, a landlord must be prepared to handle many contingencies with a wide range of possible outcomes. How well a landlord supports his business needs, emergency or not, may depend upon risk assessment and the planning and preparation conducted in advance of a direct event. Proactive and preventative measures will better protect tenant welfare and property investment than hindsight.

A landlord’s preparedness plan’s goal is to help protect people and property in an emergency. Many times it is the tenant who first identifies the risk and reports the emergency. Time is of the essence in handling emergencies. The responder’s first action can have significant effect on the outcome. In the case of the tenant being the first alert, the tenant must know what to do according to risk assessment and the landlord’s policies.

To that end there are certain basic elements in rental policies and clearly in an emergency preparedness plan that can help mitigate a potentially damaging event. A critical first priority is the element of communication.

Tenants must know how to contact the landlord and when to contact the landlord. In return the landlord must know how to contact his tenants. Both the landlord and the tenants need telephone
numbers for emergency community services , i.e. local fire, police, hospitals, poison control, ambulance, utility services, etc.

However, the definition of an emergency and the urgency of response may differ by landlord or tenant according to the first report. As part of tenant move-in orientation and as a practical matter, tenants and landlords should have mutual understanding of what constitutes an emergency. Natural disasters usually require little explanation but property emergencies can include a broad category of structural, mechanical, or other systems that may or may not require urgent attention. The emergency plan should provide examples of such property emergencies with instructions as to who to call first and when to call the landlord. When eminent danger is present, there should be no hesitation to call the 911 emergency number and then calling the landlord.

By definition an emergency is a serious, unexpected, potentially dangerous situation requiring immediate action. As examples, criminal activity, domestic violence, fire, gas leak, flooding due to plumbing failure, furnace malfunction, electrical outage, or sewer backup are emergencies. While serious enough and requiring repair, issues such as slow drains, leaky faucets, or garbage disposal adjustment can be scheduled and fixed during business hours.

As a proactive preventative measure during a move-in orientation session or the move-in inspection, the landlord should provide the tenant with instructions and location of  water and gas shut off valves, circuit breakers, fire extinguishers, smoke alarms, hot water heaters, or other safety or utility equipment.

In multi-family housing tenants should be instructed on the location of emergency exits and nearest sheltering locations.

The landlord should make sure the tenant has the necessary 24/7 information to contact the landlord or his designated representative in the event of an emergency. As part of the plan for business continuity, a landlord will need to designate his own emergency contact in the event that the landlord is unavailable or out of town when the emergency situation arises. The designated contact must be willing and available to accept the responsibility and must understand the basics of the business and have access to tenant and contractor information. An emergency plan will be of benefit to the designated representative since it will contain details of business operations and contact numbers.

Landlord contact information should also be readily available to emergency personnel or governmental agencies to facilitate assistance or for keyed access to other areas or equipment. As a reminder keys and other business equipment should be organized, secured, and clearly marked to location.

The emergency plan should also contain the contact numbers for those vendors and contractors who can be called upon for emergency repairs. Your designated emergency business operations contact should have ready access to needed numbers and services for when you were not available to conduct business.

As part of the planning for emergency response, a landlord must understand the legal obligations under most states’ landlord-tenant statutes regarding the warranty of habitability. Landlords are required to offer and maintain leased premises in a safe and sanitary condition fit for human habitation for the duration of the lease. Habitable conditions include essential services. If an emergency results in disruption, damage, or destruction of property or services which could threaten the health, safety, or well-being of tenants, the landlord and tenant have certain obligations by statute and lease agreement regarding legal rights for repairs or termination of the lease.

The business continuity plan requires adequate insurance protections. Periodic reviews of insurance coverages should be conducted to ensure there is sufficient business coverage. During tenant orientation and as part of rental policy tenants should be reminded that the landlord’s insurance policies do not cover possessions of the tenant in the event of natural disaster, damage or theft and recommend that tenants obtain insurance protection of their own.

In summary, the landlord’s emergency plan is a toolkit to prepare for and mitigate harmful events by bringing adequate response to critical needs in a timely and effective manner.

Question

I rent a studio apartment to a woman who wants to move the two children in of which she will soon be obtaining custody from her ex-husband who has had custody until now. How many people can live in a studio?

Answer

That might depend on a number of factors including the city and state of location, the size of the unit, the floor plan of the unit, and, if you end up fighting the issue in court, the opinion of a judge.

Occupancy limits are potentially a problem. Landlords may set their own reasonable occupancy standards for their rental properties and there are a number of reasons why landlords may want to restrict the number of occupants in the dwelling unit, including health and safety considerations or property component issues that might create a physical limitation (e.g., water supply or septic tank capacities).

However, unreasonable or overly restrictive occupancy standards may be in violation of federal, state, or local fair housing laws.

It is a particularly serious issue when children are involved because federal fair housing law covers 7 protected classes, of which the most obvious issue related to occupancy limits is “familial status.” The familial status protected class is to prevent unfairly limiting housing options because of children in any family group, with potential groups not related to marital status or biological children. Even pregnancy or pending adoption can qualify the person as being of the protected classes. Some jurisdictions have even more restrictive laws regarding children. A landlord’s occupancy policy that directly or indirectly excludes or even restricts children could be a violation of fair housing laws. A better occupancy policy limits the number of people per unit rather than the number of children per unit.

In all cases, anything that is applied to one unit of a property must be applied to all similar units and to all occupants. For example, a landlord can’t limit a two-bedroom unit to a couple and one child rather than allow two children, no matter what the ages and sexes of the children. Also, you can’t charge more rent for an adult and one child than for two adults who are applying to rent a similar unit at about the same time.

A commonly utilized standard for rental occupancy limits is the Department of Housing and Urban Development (HUD) guideline that “an occupancy policy of two persons in a bedroom, as a general rule, is reasonable under the Fair Housing Act.” However, landlords should note this was intended as a guideline, not as the rule, for maximum occupancy of the dwelling unit. In fact, HUD directives for investigating discrimination complaints regarding occupancy limits, take into account other limiting factors such as the size of bedrooms, size of the dwelling unit, the capacity of sewer, septic, and other building systems, and any state or local occupancy requirements. Additional information can be found at www.hud.gov.

Consideration must also be given to state and local laws regarding occupancy standards. Some states have more lenient occupancy standards than federal guidelines. For example, California statutes allow two persons per bedroom plus one more. When there is a conflict between federal, state, and local laws, landlords are safest by utilizing the least restrictive standards.

There may be local zoning or building occupancy limitations that apply to rental units. Some localities have based guidelines on the Uniform Housing Code (UHC) model code standards. The UHC standard provides occupancy guidelines based upon square footage rather than the number of bedrooms.

Another standard sometimes mentioned in landlording articles references the BOCA codes for occupancy standards. Building Officials and Administrators (BOCA), a national nonprofit member service organization publishes a series of model local building and construction codes. A maintenance code established by BOCA for guidance to municipalities for health and safety issues on existing properties has sometimes been referenced as a safe harbor standard for setting occupancy limitations. The code provided guidance on the maximum number of persons who could safely occupy a building without overcrowding, however the code was not created to use for habitability purposes.

Landlords are advised to perform their own research on applicable occupancy laws and formulate policies according to law and local court interpretations, business necessity, and without discriminating against members of any protected class. Failure to do so will result in defending against a discrimination claim under fair housing laws.

I realize that for the specific case of your question, a studio apartment, it might be impossible to apply any standards that mention number of bedrooms. For a studio, the main considerations other than any explicit laws at each level of government and absent any service limitation (e.g., water or sewer) will usually revolve around the size and layout of the unit. Whether it is reasonable to house one adult and two children in a studio apartment might also depend on the ages of the children.

To be safe, you need to first verify that there are no state or local laws that are more restrictive than HUD occupancy guidelines and federal fair housing laws. You should also consider discussing the matter with any local rental housing agency having jurisdiction regarding the property.

This is a question that might require you to consult with a competent and experienced attorney who specializes in helping landlords. It is best to use an attorney who is experienced in occupancy issues, even one who has enough experience with the particular court of jurisdiction or the local agencies that pursue discrimination claims. The cost of an attorney consultation will almost certainly be much less expensive than being charged with a fair housing violation.

Question

I have a problem tenant who, in response to my demanding payment of rent that is now a week late, has threatened to report me for failing to maintain their rental unit in habitable condition. I know of no problem that makes their unit uninhabitable. What should I do?

Answer

The first thing you must do is research the laws of your state and municipality regarding the items that are related to the issue of habitability. In general, the requirements for a rental being considered habitable vary among states. A state’s requirements may be more or less comprehensive than the requirements for rental housing that might be affected by HUD requirements that apply to Section 8 or other federal subsidized housing. Rules of the most comprehensive jurisdiction must be of concern.

Many states have one or more statutes related to the habitability issue. However, in most states courts have developed the legal doctrine of an implied warranty of habitability.

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.

In the past landlords were only required to deliver possession of the premises to the tenant in return for the tenant paying rent.  However courts began to uphold that the lease by its nature was a contract and was controlled by principals of contract law. The lease contained mutual dependent warranties – the tenant’s promise to pay rent and the landlord’s imposed obligation to provide habitable premises. A material breach of obligations by either party relieves the other party from his obligation as long as the breach continues. If the landlord causes a material breach of the warranty the tenant may be entitled to such remedies as damages, lease termination, rent abatement, or repair and deduct expenses. The landlord’s obligations do not extend to breakages, malfunctions, or other conditions which do not materially affect the health and safety of the tenant nor is the landlord held to correct conditions caused by misuse or inappropriate use of the premises by the tenant, the tenant’s family or invited guests.

States that have adopted the implied warranty of habitability through statute or judicial law have used one of two approaches as the source to determine habitability requirements. One approach uses local building codes which have specific minimum requirements for essential services such as water, plumbing, and heat. The other approach uses common law definitions of habitable housing conditions.

An important point for landlords is to understand the source of their state’s requirements (building codes or common law) since the source of the warranty controls the landlord’s responsibilities and tenant’s remedies. States that use building codes as the source of warranty make it easier for compliance because they have detailed specific requirements for repair and maintenance responsibilities. In states that use common law definitions for habitability, implied warranty is independent of building codes and may be more difficult to satisfy requirements. Landlords may be responsible for repairs and maintenance under building codes and responsible for repairs and maintenance under the common law approach. Landlords may thus be held to more responsibilities for habitability in those states that use common law definitions for warranty of habitability.

For most states, basic requirements for habitable housing include:

• Maintenance of systems for electrical, plumbing, heating and/or cooling, ventilating,  sewage and sanitation
• Supplying potable water and hot water
• Providing for trash collection and removal
• Maintenance of common use areas

The landlord is advised to check for state and regional variations that may impose additional requirements to ensure habitable conditions. Requirements could include weather-proofing protection against heat, cold, and water conditions, severe weather, and pest extermination.

In addition to obtaining information regarding habitability for the location of your rentals, discussion related to habitability and significantly more complete lists of items that should be repaired and maintained and which must be of concern for federal subsidized housing, visit the HUD website at hud.gov.

If the tenants have ever reported issues potentially related to habitability, you should have dealt with the issues as soon as possible after receiving the report and generated documentation for your records. If the tenants now report issues, you should generate related documentation and take care of them immediately. If you think that the tenants don’t really have legitimate habitability complaints, you should serve them with a “pay or quit” notice.

If the tenants breaks their lease using non-habitability the reason, what you can do or must do depends on the facts of the entire matter, including the written correspondence and other records you maintained and perhaps how much the tenants might wish to move for unrelated reasons.