Pets in Rental Housing – Part 4

In Part 1 of this series we discussed some basic issues related to landlord pet policy, primarily why it might be beneficial to be a pet friendly landlord. In Part 2 we discussed certain issues in more detail. In Part 3, we discussed some of those basic issues that should be covered by a pet agreement. In this Part 4 of the series we’ll cover yet other topics of importance to landlords who wish to accept animals in their rental properties.

Know the Laws

Additional rent, a separate pet deposit, and/or other pet related financial items can help offset costs to repair pet damage. Requiring that pets have been spayed or neutered, have successfully completed obedience training, have regular health examinations, are licensed, are current with required vaccinations, are cleaned up after, and are always kept under control at all times, including on leash or harness when in common areas, can reduce unwanted behaviors and help with the various issues related to allowing pets in rental housing.

However, landlords must be knowledgeable about all federal, state, or local laws that might impact their plans regarding such requirements or restrictions regarding pets.

For example, pet security deposits may be in addition to the maximum usual security deposit in some states, but the maximum security deposit includes the amount of any pet deposit in other states. Also, in some states the pet deposit cannot be used for unpaid rent or non-pet related physical damages. Even in those states not having a limit on a separate animal deposit, the maximum amount is limited by the rental market and the financial condition of potential applicants.

Since it is usually impossible to collect a deposit high enough to cover all possible animal-related damages, the best protection is to set screening financial qualifications high enough to improve the chances of collecting for damages that exceed the available deposit. This includes applicants having enough income and assets to cover significant damages and a good credit record that indicates financial responsibility for obligations. Of course, the bar at which financial qualifications can be set depends greatly on the type of property and the location of the property, as well current rental market conditions.

Qualifying an Applicant’s Animals

Just as human applicants should be screened and selected for tenancy based upon well-defined screening and selection criteria, animals belonging to applicants should be screened for qualification and approval before being allowed on the rental premises whether they are with the tenant at move-in or are later acquired.

A “pet resume” provided by an applicant can provide information on licensing, health, vaccinations, training, grooming, etc., but a personal meeting with the pet provides insight into temperament or usual behavior. It may also reveal that the “small” dog listed on the application is a small Great Dane or that a “mutt” is 80 percent one of the breeds considered to be potentially dangerous, even one prohibited by the insurer. It is a good idea to take photos of the animal(s) interviewed so that there is proof of the particular animal that was approved as being qualified.

The same detailed information regarding the criteria for qualifying animals and other policy issues provided to applicants should be stated in a section of the lease agreement or an addendum to the lease that is referenced within the lease agreement. For general understanding and to be legally enforceable, policies must be written and detailed. It should be in language anyone with a basic education should understand and be written so as to be unambiguous.

Even if pets are not allowed by a landlord, when checking rental history with previous landlords, the you should ask if the applicant had pets during his tenancy because you may at least have a better idea of whether or not you will need to keep an eye out regarding adherence to the pet prohibition if the person is otherwise qualified and you want the applicant as a tenant. If yes, ask if the landlord required pre-approval of pet and, if so, whether the tenant had gotten approval in advance or the landlord had simply tolerated the animal after discovery, as this may indicate the degree to which an applicant follows the rules. Ask whether the pet was well-behaved and adequately controlled by the tenant. Were any complaints received from other tenants regarding the pet? Did the animal do any damage to property of the landlord or of other tenants? Finally, ask previous landlords if they remember the type of animal the subject applicants had when they lived at the landlord’s property. If only one question could be answered, it would be “would you rent to this applicant and his/her animals again?” This question only calls for a yes or no answer; although the silence before the answer could provide guidance without the previous landlord actually giving details. When possible, the landlord(s) interviewed should not be only the applicant’s current landlord who might be inclined to slant the history in order to help an unsatisfactory tenant leave.

The most important point regarding the setting of animal policies related to financial risks of landlords is to know which animals are of concern to their particular insurers and so may be excluded from liability coverage of their policies. For example, many insurers now list breeds of dogs that are not covered, as many as a dozen different breeds for some insurers.

Dog bites are a major financial burden for the insurance industry. It is rumored that bite related claims accounted for more than one-third of all homeowners liability claims paid out in in recent years, accounting for around half-a-billion dollars. Insurers are in the business of evaluating risk, and based on what their statistics regarding bite claims show, insurers know the dogs on their ‘uninsurable list’ pose a higher risk to their profits. While the average of claims is in the tens of thousands if dollars, verdicts can be more than a million dollars.

Insurance company lists may be have names such as “excluded dog breeds,” “aggressive dog breeds,” “list of dangerous dogs,” “prohibited dog breeds,” or simply “bad dog list.” The dog breeds which can be found on these lists are similar for many insurers because they all come from similar research studies. For insurers who have a list, the most often blacklisted dog breeds appearing on their lists include many or all of the following:

• Pit Bull Terriers
• Staffordshire Terriers
• Rottweilers
• German Shepherds
• Presa Canarios
• Chows Chows
• Doberman Pinschers
• Akitas
• Wolf-hybrids
• Mastiffs
• Cane Corsos
• Great Danes
• Alaskan Malamutes
• Siberian Huskies

No specific scientific criteria are required for a dog breed to be blacklisted and each company comes up with its own list based upon its opinion of the risks related to particular breeds.

Since most pet owners consider their pet as family on par with children, it may take some diplomacy if such a “family member” is ineligible according to the landlord’s standard pet policies. Setting reasonable, common sense standards in accordance with laws and insurer prohibitions should allow the majority of pets and their owners the chance to qualify for tenancy.

Dangerous Pets

Although only a minority of dogs might be considered dangerous, there are animal types of which all variations are dangerous. Although one usually doesn’t consider such animals as being possible pets, there are some people who do consider any animal, even potentially dangerous ones such as venomous snakes, to be a possible pet. Accordingly, an adequately documented pet policy must take this fact into account, defining what species of animal is and/or what species is not allowed. As for many issues regarding selection of an applicant to be a tenant, even though animals are in general not covered by fair housing laws, all applicants must be treated equally regarding animals in order to avoid even an appearance of housing discrimination.

There are many types of animals that are not the usual dog or cat and that, although not dangerous to human life or health, can be dangerous to a landlord’s property. While there are numerous examples, we will consider fish. Fish, while not usually considered a problem, can be. Even minor aquarium leaks, when undetected for a significant period, can produce thousands of dollars in damages if flooring is ruined, drywall of ceilings and walls of multiple units require repair due to flooding of units above. Not only is the physical damage itself an issue, but it may be necessary to provide temporary housing for other tenants while their units are being repaired. The agreement should limit the size of the tank to the amount of water which would not cause serious damage upon total collapse of the tank, perhaps at most a few gallons.

Also, water is heavy! So, for larger tanks specific approval of the landlord or his qualified contractor should be required and the tenant should be required to provide adequate insurance that includes pet damage, with the policy naming the landlord as additional insured. The tenant should be required to place the tank in an approved safe location within the unit, taking into account structure flooring and supporting framing, including use of weight distribution principles and materials to protect flooring, and to utilize a stand or table sufficient to stably support the weight of the filled tank. The required insurance should cover both minor leaks and catastrophic events.

Lease agreements and/or separate “pet agreements” available from most legal document publishers will fail to adequately cover the animal issue or have the degree of detail that should be desired by all landlords. Accordingly, a landlord should create the necessary documentation based on issues mentioned in this article and future parts of this series, and on the landlord’s experience with tenants that had animals.

While we won’t provide a ready-to use-pet agreement in this series, future parts will further discuss items of importance for agreements.

Showing an Occupied Unit

Time is of the essence when re-renting a property. Without adequate planning and preparation for the move-out of the current tenant and the welcoming of a new tenant, a landlord may have the potential of lost rents and unhappy tenants, old or new. Timing of events is a controlling factor in the filling vacancies process.

A key decision will be whether to market the occupied property or wait until the current tenant has vacated and possession of the property has been returned to the landlord. While there are advantages and disadvantages to either marketing approach, deciding factors may include the condition of the local rental market, the amount of business risk that the landlord is willing and able to take, the condition of the property in general, and the housekeeping habits of the current tenant in particular.

Transitioning tenants requires communication, coordination, and compliance with applicable landlord-tenant statutes. Move-in and move-out events are separate but equal processes that demand time and effort. If you decide to market an occupied property, you need to make sure you have the ability and resources to successfully multi-task a simultaneous transition. If you decide to process one event at a time, you need to allow for the expected down time between tenants. Either approach can be subject to outside influences that could cause unexpected delays or issues. Either approach can benefit from having a prepared plan, even if the plan may be subject to change.

A vacant unit is an expense with no offsetting rent revenues. Many landlords can absorb some loss of rents for a short time, but a long term vacancy may have a serious effect on the business bottom line. To minimize costs of vacancy many landlords attempt a zero vacancy turnover policy. As the old tenant is moving out, the new tenant is moving in. The almost simultaneous move-out and move-in strategy can substantially reduce vacancy down time. However, such strategy is not without risk and may create more stress than could be offset by the transfer of renters.

The advantages of showing an occupied unit include the potential of uninterrupted cash flow, provided of course that each tenant fulfills his obligation to pay rent in a timely manner. Many utility companies can schedule same day turn off – turn on of essential services which could be of benefit in back-to-back scheduling of tenants, saving time for landlord or tenants.

However there are disadvantages to showing a unit that is still occupied. In addition to showing of occupied units may discourage some potential applicants due to poor housekeeping, adding additional stress to an already stressful situation has the potential to create conflicts between landlord and tenant, both old and new. Conflicts can lead to disputes regarding privacy, proper notices of entry, and even tenant claims of theft.

By statute the tenant has the right of the covenant of quiet enjoyment for the term of his lease period. This covenant ensures that during his tenancy, the tenant’s use and enjoyment of the dwelling unit will not be disturbed by others including the landlord.

In most states, notice of entry can be an issue if the departing tenant wishes to hold the landlord to the letter of the law. Many states require the landlord to provide the tenant 48 hours’ notice prior to each non-emergency entry. Furthermore, entry must be during reasonable hours. Not only is 48 hours, even 24 hours, a long time when potential applicants are looking for housing, but the tenant may not consider it reasonable to show the unit during the dinner hours or at certain other specific times on certain days. The landlord cannot gain entry against the tenant’s wishes. The landlord’s only recourse against failure of the tenant to cooperate is to file a lawsuit. Use of force or even excessive pressure could result in not only a lawsuit against the landlord, but even criminal charges.

Security issues are of particular concern when the property is being shown when the tenant is not at home. The tenant is more likely to make claims of theft or damage against unknown persons viewing the unit than against the landlord or manager who is doing the showing. The landlord should remember that he is providing entry to persons on whom little information is known and any type of applicant screening has yet to be done.

To protect himself and his family a tenant will need to secure or remove personal items and items of value during times of showings. If multiple showings are requested, this could be a burden upon the departing tenant, adding to the tenant’s stress regarding the move.

The matter of privacy and advance notice is best dealt with by discussing the issues in advance of marketing the still-occupied unit. Making sure the tenant understands what is expected will help minimize conflicts. Often, agreeing on a specific time of the day when showings might occur is helpful. It may even be necessary to financially reward the tenant in order to gain good cooperation.

Since the unit is occupied, it is usually better to avoid placing For Rent signs on the property until the tenant has actually vacated. This will help protect the tenant’s privacy by not openly advertising the coming vacancy to drive-by vandals or criminal elements, not to mention the potential for those looking for rental housing appearing at the tenant’s door. Of course the landlord will want to advertise the vacancy, but should choose the media and marketing tools accordingly.

Of major concern to the landlord is the uncertainty of the tenant’s housekeeping standards and the general condition of the rental property at the time of showing. While most visitors will understand and empathize accordingly, boxes and packing materials may contribute to generalized clutter and it may be difficult for a visitor to appreciate some of the property’s features, or visualize how they would live there. It is difficult for a prospective new tenant to properly evaluate a unit that is overly filled with furniture and personal belongings, including already packed moving boxes, some of which may hide rental unit defects that would be objectionable to the prospect. It may be that some areas are considered “off limits” because of family living arrangements, containment of household pets, or use as a staging area for the upcoming move.

If the prospective applicant cannot see beyond the current condition of the unit, he may decide the unit is not worth the rent being asked. Obviously, the degree to which this is an issue will depend primarily on the housekeeping habits of the departing tenant, but will also depend on the condition of the unit compared to the condition it will be at move-in of a new tenant.

The prospect may be concerned about depending on the landlord’s promises regarding work to be done. Offering to put promises into writing can help, but many people can only see what exists and cannot visualize promised work or their expectations may be more than what the landlord plans to provide.

There is potential for trouble when the landlord commits to a new tenant before the old tenant has actually vacated the unit. When the unit for which applications are being taken is still occupied, one must be concerned that the old tenant may not vacate in a timely manner. A landlord who has signed a lease with a replacement tenant and then finds that the existing tenant fails to vacate as scheduled can end up between a rock and a hard place. At best, there is an unhappy beginning, and, at worst, there may be a need to compensate the new tenant for inconvenience and/or the need for him/her to obtain temporary housing and/or storage space. It can even result in a lawsuit, further delaying re-leasing of the unit in addition to the cost of defending against the lawsuit.

The new tenant may have given notice at his rental across town or be staying in a motel and paying daily on the moving van after moving across country. It is possible that the old tenant will not leave voluntarily, period, and require eviction. It is easily possible that an anticipated one-week turn-around becomes a month or more. Even if the new tenant is willing to continue living in a motel or with friends, it might be expected that the landlord will pick up the tab for all of the new tenant’s increased expenses.

There are ways to minimize the potential risk of being unable to give possession to the new tenant on the date promised. Risk is greatly reduced by having previously put a good tenant in the unit and utilizing a lease agreement that clearly defines move-out procedures.

Holding over upon expiration of a lease term can be made less attractive to the departing tenant by specifying in the lease that the rent is automatically raised a significant amount at the end of the lease period unless a new lease or renewal of the lease is negotiated at least a minimum period in advance of expiration.

However, if the old tenant is himself facing an unexpected last minute problem, for example, his new residence not being ready as promised for his occupancy, the very best of tenants might not leave as planned. In such circumstances a large rent increase or even the threat of an eviction may not help. Even a few hundred dollars of increased rent for holding over will be more attractive to the departing tenant than the alternative of finding other temporary housing and storage of his furniture and other belongings at the last minute.

Even a holdover of only a few days can become a significant problem if the landlord had committed to the new tenant being able to move in 5 days after expiration of the old tenant’s lease because the landlord figured that the necessary preparation would take that amount of time and the landlord discovers, upon gaining possession of the empty unit, that significantly more work than expected will be required.

The best protection for the landlord is to put some of the risk on the incoming tenant by a lease clause or separate document in which the incoming tenant understands that possession is contingent on the old tenant vacating by a specific date, meaning that possession will be given within the time required for preparing the unit after the vacating. This may, of course, eliminate some potential candidates from the pool and even seriously deflate the pool in a bad market.

The bottom line is that landlords should consider the overall picture when deciding whether to market an occupied property. The vacancy period between the tenants is usually most dependent on the time that will be required to clean, paint, and perform other work required between the tenants. Under normal market conditions, trying to get a head start on signing a new tenant does not provide much advantage over waiting to show the property when possession has been returned to the landlord. A landlord must decide whether that small advantage is worth the extra trouble, the other issues related to an occupied unit, and the potential for serious problems.

Pets in Rental Housing – Part 3

In Parts 1 and 2 of this series we discussed some basic issues related to landlord pet policy. In this Part 3, we’ll discuss other issues, including some of those that should be covered by a pet agreement.

When animals are allowed, detailed information regarding the landlord’s qualifying criteria must be provided at first contact in order to avoid time being wasted by both landlord and applicant. Even if a landlord has previously mentioned his animal policy on the phone, it is important to be sure that applicants fully understand the policy before completing and returning an application form. This is best accomplished via an information package included with application forms handed out to prospects. Such a package is also useful for conveying other information that might influence an applicant’s interest in proceeding with submission of an application.

Information regarding pet policy provided to potential applicants might cover the following requirements and restrictions:

The applicant must disclose on the application form any animals that will be residing on the property and the written authorization for the animals’ presence must be received prior to bringing them onto to the property.

Animals require advance approval under the landlord’s qualifying criteria, whether having them when they move in or acquiring them later during residency. All issues related to the qualifying criteria including animals that are allowed or not allowed should be included. In particular, species and numbers of animals allowed. For example, only 1 dog weighing less than 50 pounds, 2 cats, 3 birds, or 4 fish are allowed and no pit bulls or malamutes are allowed, whether those of the tenants or their guests.

The procedures for obtaining approval for animals should be provided. Examples of possible procedure criteria include: advance written request by the tenant, proof of insurance covering risks associated with the type of animal, proof of any shots usually advised or required for the type of animal, and proof of licensing required by local law.

Tenants who bring animals onto the property must be sure that the animals are at all times adequately cared for and controlled so that they do not damage the property of the landlord, of other tenants, or of the general public and that they do not annoy or injure those parties. Examples of possible requirements include: allowed and/or prohibited areas (e.g., inside or outside of the unit and specific common areas); required restraints on and off the leased premises (e.g., on leash outside of unit or fenced yard); animal feeding issues (e.g., where allowed or prohibited and/or no food left outside overnight); and control regarding noise or other issues of potential concern to others.

The amount of any pet deposit (potentially refundable if it’s called a deposit), the amount of any monthly rent surcharge, or any other cost related to an animal that is allowed in the state where your rental is located, including whether it is a total animal charge or a per animal charge, should be disclosed.

The warning that having unauthorized animals will result in a higher rent from the date when animal was brought onto the property or from the date of commencement of the lease, and/or to an additional deposit, and that repeated violations will be grounds for lease termination.

Providing a copy of the lease agreement (and pet addendum if a separate document) itself attached to the application form will avoid the need for a separate information package and will provide advance notice of any special terms within the lease (e.g., HOA or tenant maintenance issues).

When an HOA is involved, its requirements and restrictions related to animals must also be considered and the applicants should be told that they will be responsible for fines imposed because of violation of HOA restrictions.

The lease agreement itself or a pet agreement addendum should cover in even greater detail the issues mentioned above.

Most “pet” owners have a cat or dog, sometimes birds, fish or other small mammals. Some pet owners have exotic pets, some of which can even be seriously dangerous. Accordingly, it may be better to use the term “animal” rather than the word “pet” in both spoken and written discussions regarding the issue in order to avoid arguments about whether or not a particular animal is a pet in the strictest sense. For example, farm animals such as chickens are not usually considered to be pets by adults who raise them to be eaten. Could this mean chickens on your rental property would not be covered by a landlord’s “pet policy?”

Whether one uses the word “pets” or “animals,” the necessary clauses can be totally within the lease agreement itself or in a separate “Pet or Animal Agreement” addendum referenced in the lease agreement document. The relevant clauses within the lease agreement might be titled “Pets” or “Animals” and a separate document containing those paragraphs might be titled “Pet Agreement” or “Animal Agreement.” However, it is probably better to always use the term “animal” in either place in order to avoid arguments about whether or not a particular animal is a pet in the strictest sense if the word.

Each landlord must decide the types of requirements and restrictions they wish to include in the lease documentation, with the degree depending on the location, type, and quality of the rental property and the landlord’s tolerance for problems. For example, an older single family home rental usually presents a lower risk of problems than a rental unit in an apartment complex or in a development having an HOA or even for a newer single family home.

Obviously, different categories of animals potentially create vastly different potential problems and types of damages – for example, fish compared to hamsters compared to certain breeds of dogs.

Accordingly, considering the number of issues that must be discussed and the number of different animal categories that must be covered, a good animal agreement will be lengthy. While the length of the agreement can vary significantly depending on the complexity of the animal policy desired by a landlord and the specific property, an adequate animal agreement, whether a section in the lease agreement or a separate document cross referenced with the lease, will likely be at least several pages in length.

All tenants, even if they do not initially have an animal, should be required to sign a lease document having an animal section or a separate animal agreement so that the tenants are aware of the rules and procedures if they decide they want to have an animal after moving in, whether or not they think that might happen. If the animal issue is not totally covered within the lease agreement, all occupants who sign the lease agreement should also sign the separate animal agreement whether or not they expect to ever have an animal.

The animal agreement should also state that no animal damage of any kind will be considered to be “normal wear and tear.” Clauses related to animals must be written so as to apply also to any visiting animals brought onto the premises by the tenants, minor family members, and guests or agents of the tenants. It is probably good practice to include a statement that prohibition does not apply to bona fide service animals.

Applicants should be informed about the value of having renter insurance and the fact that the cost of a policy is relatively low, particularly when provided by the same insurer that provides auto and other coverages for the tenant. In addition to being of benefit to the tenant, the fact that tenants have rental insurance can also benefit the landlord by reducing chances of disputes and unhappy tenants if there is damage to the tenant’s personal property from any cause or loss. The fact that the tenants have some liability insurance protection can also provide additional protection to the landlord. Because of these landlord benefits landlords might consider, if allowed by state law, requiring tenants to provide liability insurance that includes adequate liability coverages for tenant-owned animals, with the policy naming the landlord as additional insured.

Landlords should always prohibit any animals that are excluded from the liability coverage under their landlord insurance policy – e.g., dog breeds that are considered dangerous.

Adequately qualifying animals, restrictions on types of animals, and control requirements can reduce animal problems. Adequately qualifying applicants’ past rental history, both generally and specifically regarding their animals, can significantly reduce risks. Finally, additional rent, a separate pet deposit, other pet related financial items, as allowed by state statute, can help offset costs to repair pet damage that occurs despite the best efforts of the landlord and of the tenants themselves.

Question

I have an applicant that looks good, but he won’t have the full amount needed for both the security deposit and the first month rent for a week. He and his family are living with relatives. He is asking for permission to move his trailer load of belongings into the unit so that he can stop paying rent on the trailer. Are there issues regarding allowing this?

Answer

The issue of when possession of a unit should be given to the selected applicant is an important one that has potentially significant legal and financial implications. It should always be remembered that it can require an eviction to remove tenants once they are in possession.

Possession of a unit should not be given to new tenants until (1) all documentation, including lead paint disclosure if applicable, has been executed by all parties on the lease agreement, (2) all moneys have been received by the landlord (funds being in cashier check or cash), and (3) if utilities are still in the landlord’s name, arrangements have been made for certain transfer to the tenant.

Regarding item 3, allowing possession with utilities in the landlord’s name can result in problems because, in many jurisdictions, if the tenant fails transfer them to his/her own name, the landlord does not have the right to turn them off. This circumstance could require an eviction. While an eviction should be obtainable, assuming adequate lease clauses regarding the issue, it will require both money and a time for the landlord to regain possession.

It also highly recommended that a walk-thru inspection with move-in checklist being completed and signed by both parties prior to giving possession.

Never let a prospective tenant stay temporarily or even move a single item of his personal property into your vacant unit until all pre-possession tasks are completed and there is no chance that you’ll change your mind about the person’s selection. If you give out the key or indicate transfer of possession in some other way, including storage of tenant belongings on the property, you have effectively given him the legally protected status of tenant even though not all funds were paid or any other contingency of the lease agreement was not yet met. It will now require an eviction if he can’t complete the terms of move-in and refuses to voluntarily leave.

Finally, possession is often transferred by the landlord to the new tenant simply turning over the keys to the new tenants at the landlord’s home or office, perhaps with the tenants being handed a move-in checklist. However, a more formal safer way of transferring possession, though requiring more time for both landlord and tenant, has significant advantages in reducing risks for the landlord is to give possession at a “tenant orientation” at the rental with all signatories of the lease agreement present, if possible. It is possible that the new tenant orientation will be the only time that all parties are face-to-face until the time comes to conduct the move-out inspection. This is an opportunity for the landlord to make sure the tenants understand their responsibilities during their tenancy, as well as have a completed and signed move-in check list in hand prior to giving possession.

Typically, tenant orientation includes:

• signing of lease agreement if not previously completed by all occupants of legal age,
• delivery of all fees, deposits and rents (certified funds or cash) that might still be outstanding,
• brief review of lease agreement by the landlord, including rent collection policies and procedures, and discussion of any separate “house rules,”
• completion of      the move-in inspection and completion of move-in checklist and signing of same by all lease agreement signatories,
• showing the tenants location of and explain operation of circuit breakers, gas shutoff valve, water shutoff valves, water heater, heating/cooling system,  and
• giving the keys to the new tenants.

Pets in Rental Housing – Part 2

In Part 1 of this series we discussed some basic issues related to landlord pet policy, primarily why it might be beneficial to be a pet friendly landlord. In this Part 2, we’ll discuss certain issues in more detail.

In review, opportunities exist to accommodate tenants with pets. Renting to pet owners may make good business sense. Landlords may receive the benefits of additional rental income and potentially fewer vacancies, as studies have shown that renters with pets average a longer rental stay than those renters without pets, likely due to the potential difficulty of finding a satisfactory new pet friendly rental property.

Recent polls show the following:

About two-thirds of renters who needed to find a new rental unit during 2014 experienced difficulty in finding rental housing that allows pets.

For 90 percent of the tenants who have pets, landlord or property manager pet policies played a major part in deciding where to rent.

When deciding where to rent, about 70 percent of pet owning tenants looked for availability of pet amenities such as parks, pet stores, groomers, pet care, and veterinarians being nearby or located within reasonable distance of their rental housing.

In general, a tenant does not have a “right” to have a pet on the rental property and it is not a violation of fair housing laws when pets are prohibited. Accordingly, a landlord can legally refuse to rent to tenants having pets or to allow some specific types of pets and prohibit others.

However, although landlords can prohibit pets, they cannot refuse to rent to an applicant with an animal that is a trained service or companion animal and no “pet deposit” can be required for such an animal. Such animals may be other than dogs. Accordingly, to minimize potential discrimination claims, landlords should consider clarifying in spoken or written discussion of their “no-pet” policies that the prohibition does not apply to animals excepted under fair housing laws or the Americans with Disabilities Act (ADA).

Those landlords with a “no pets” policy cite concerns about pet related damage, noise and other annoyance issues, and liability for injury. Landlords who welcome animal companions, advertising “pet friendly” living, address these concerns through the use of pet deposits and/or rent differentials (as allowed by law), detailed written policies regarding pets, and adequately written pet agreements.

Since most pet owners consider their pet as family, it may take some diplomacy if a “family member” is ineligible according to the landlord’s standard pet policies. Setting reasonable, common sense standards in accordance with laws and insurer prohibitions should allow the majority of pets and their owners the chance to qualify for tenancy.

Requiring that pets have successfully completed obedience training, have regular health examinations, are licensed, are current with required vaccinations, and must be kept under control at all times are possible requirements that can reduce unwanted behaviors.

Deposits/Fees/Rents

Any additional deposits, rents, or other fees based on pets must be in accordance with state law. For example, pet security deposits may be collected in addition to the maximum allowed security deposit in some states, but the maximum security deposit includes the amount of any pet deposit in other states. Also, in some states the pet deposit cannot be used for unpaid rent or non-pet related physical damages.

In those states not having a limit on a separate pet deposit or additional pet rent, the maximum amount is limited by the rental market, the availability of valued pet amenities, and the financial conditions of potential applicants.

Pet Policies

Although one usually doesn’t consider all animals as being possible pets, there are some people who do consider any animal to be a possible pet. Accordingly, an adequately written pet policy and pet agreement must take this fact into account.

A good pet policy backed by an adequate pet agreement can provide the tools needed for the landlord to better control tenants’ pets and to more effectively deal with a tenant and/or the tenant’s offending animal.

For general understanding and to be legally enforceable, pet policies must be written, specific, detailed, and unambiguous.

If all pets are prohibited, then landlord advertising should state that fact and when speaking with potential applicants for the first time or when handing out application forms a landlord should be sure to state his policy. If not disclosed at first contact, both the applicant and the landlord may be wasting time.

For the same reason, when pets are allowed, but must meet the landlord’s qualifying criteria, this fact and qualification information should be stated in spoken or written communication. Even if a landlord has previously mentioned his pet policy on the phone, making sure applicants fully understand the policy is best accomplished by providing detailed written information attached to application forms handed out to all prospects.

An inconsistent pet policy that allows some tenants to have a particular type or number of pets while denying other tenants to have a similar type or number of pets is usually a bad idea because it can result in bad landlord-tenant relationships. Furthermore, an inconsistent policy can lead to a discrimination claim.

Advertising

Proper advertising can be important to avoiding problems. When landlords advertise that they are “pet friendly” they should be careful of how the advertising is worded. Stating the monthly rent and security deposit for a non-pet owner tenant in ad copy and then informing a caller that if he/she has a pet, the rent and/or deposit will be a different amount could be construed as false and deceptive advertising.

When marketing a vacancy, landlords should state their pet policies when replying to inquiries regarding whether or not pets are allowed in the rental unit. If pets are not allowed, landlords should consider clarifying that the prohibition does not apply to animals excepted under fair housing laws or the ADA.

If pets are allowed, landlords should provide detailed information about which animals are acceptable. Listing acceptable animals is much easier than creating a list of all possible unacceptable animals, the latter also likely to miss many or those that would not be acceptable. State the amount of any pet deposit (potentially refundable), the amount of any monthly pet rent surcharge, and any other cost related to a pet. The pet agreement should include clauses stating the potential penalties for failing to abide by its terms.

Pet Agreement

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

However, rather than depend on general principles of law it is far better for a landlord to have a good written policy regarding pets that is made known to potential applicants in advance and is explicitly agreed to by all tenants by signing a document – usually titled “Pet Agreement” – agreeing to abide by the landlord’s pet policy. Such agreements should include both rules/agreements regarding prohibition against tenant actions and penalties for violating those rules/agreements.

Although many landlords resist creating long lease agreements, more detail is almost always better than less. The degree of protection for a landlord depends on how well the pet policy is designed, how well the landlord verifies conformance by tenants, and how rigorously a landlord enforces the policy.

The pet agreement can be a section titled “Pets” that is totally within the lease agreement document itself or a separate “Pet Agreement” addendum referenced in the lease agreement can be utilized.

It is also worth mentioning that having a pet and having an “approved” pet are entirely different issues that must be clarified with prospects, applicants, and tenants. Most pet owners have a cat or dog, sometimes birds, fish or small mammals. Some pet owners have exotic pets, some of which can be seriously dangerous. Accordingly, all pets must require approval.

Insurance Issues

There is another important point regarding the setting of pet policies. Landlords absolutely must also have an insurance policy that adequately covers the landlord regarding tenant owned pets.

Insurance policy liability coverage on a rental property may exempt certain types of animals or certain dog breeds or impose other restrictions regarding tenants and their pets. Understand what those conditions or restrictions are before putting out the welcome mat to all pets. Restrictions on types of animals as well as control requirements must be incorporated into the landlord’s rental policies and lease documentation. Most importantly, restrictions should include prohibition of those animals that the landlord’s insurance policy will not cover for liability or that could pose a danger to others.

Landlords should always prohibit any animals that are excluded from the liability coverage under their landlord insurance policy – e.g., dog breeds that are considered dangerous. If allowed by law where a rental property is located and if market conditions allow, landlords should consider requiring that tenants carry rental insurance that includes adequate liability coverages for tenant-owned animals, while also still prohibiting animals not covered by the landlord’s liability insurance.

For both of the above issues, detailed pet policy documentation and strict enforcement of the policy may be beneficial if there is an event that occurs when a tenant has an unauthorized animal on the leased premises.

Landlords should also be aware of the fact that an increasing number of jurisdictions are making the landlord fully liable for injuries to others and for damages to the property of others caused by tenants’ animals. Landlords should keep up to date regarding such laws in the state and local jurisdiction where their rental properties are located. In jurisdictions where landlords are made explicitly liable for tenant-owned animals, landlords must take extra care to have adequate lease documentation, adamantly prohibit animals excluded from the landlord’s liability insurance, require renter insurance having adequate liability coverage, and always strictly enforce their pet policy.

In future parts of this series we’ll discuss in greater detail some of the issues discussed above as well as various other issues.

Renters Insurance Benefits

Renters insurance can be of benefit to landlords. Accordingly, landlords should encourage tenants to have renters insurance and, if allowed by their state’s law, should consider making renters insurance mandatory for all their units.

One estimate is that less than a quarter of renters have renters insurance. Many mistakenly think that the landlord’s insurance will protect them regarding various risks.

They do not realize that they must purchase their own insurance to cover damage to their personal property resulting from risks such as fire, vandalism, and theft. Tenants must clearly understand that a landlord’s insurance does not extend to the tenant’s personal property. Neither does the landlord’s policy cover the tenant’s liability for damages to property of others or to injuries or death occurring on their leased premises.

Many also do not understand that they may be held responsible for injury to another person or damage to another person’s property, whether the incident occurred within their rented premises or, under some circumstances, elsewhere. Without liability coverage, their assets and their current and future earnings could be at risk.

Accordingly, landlords and property managers should (1) explicitly inform new and existing tenants who have not been previously informed that the owner’s insurance does not (a) cover their own personal property, (b) cover damages to the landlord’s property resulting from their actions or inactions, or (c) protect them against judgments from lawsuits related to their occupancy of the property and (2) make every effort to be sure that tenants realize the importance of purchasing their own renters insurance. Landlords benefit when including this information within the lease agreement.

Many fires in rental units are caused by tenants while cooking, by use of faulty appliances or extension cords supplied by tenants, or by improper use of those items. Accordingly, tenants should also be made aware that the landlord will have the legal right to collect from the tenant for any damages to the landlord’s property caused by the tenant’s negligence and that the tenant may be held liable by the landlord’s insurer for any amounts related to such damages paid to the landlord by the landlord’s own insurer.

A tenant’s casualty coverage will reduce potential landlord-tenant disputes after tenant’s losses, including from fire, water damage, and theft. A tenant’s liability coverage may also provide additional liability protection for the landlord.

Many tenants have limited assets and are somewhat “judgment proof.” Accordingly, landlords should usually expect to be named in any lawsuit when someone is injured on a rental property, no matter that the landlord was in no way at fault. A tenant’s insurance policy that includes liability coverage may eliminate the need for the landlord’s insurance policies to pay claims.

It is the insured’s responsibility to immediately notify his/her insurance company or agent as soon as he/she learns about a claim or a probable claim. In fact, the policy will have a requirement to “immediately tender” any claim. Failure to do so in a timely manner may jeopardize the coverage. For most liability policies, you are required to notify the insurer immediately after an incident on your property that might cause a future claim no matter how unimportant the incident may seem at the time it occurs.

Therefore, no matter how good the coverages provided by the tenant’s policy and whether or not the landlord is named in a claim related to a rental property, landlords should report any event that could lead to potential claims against the landlord even when it seems obvious the claim will ultimately be against the tenant’s policy. It will be up to the landlord’s insurance company and the tenant’s insurance company to determine which of them is liable for payment of claims.

In most states tenants can be required to carry renters insurance by the lease agreement. Many landlord insurers for commercial properties require that the landlord make specified insurance a lease requirement, with the landlord being responsible for making certain that such insurance remains in effect during the tenant’s tenancy. However, landlords should verify that their state does not prohibit or otherwise regulate such a requirement for residential rental properties. When requiring the tenant to carry insurance, the lease should also require that the policy include the rental property as an additional insured and a vested party for reimbursement in the case of any damages.

If an event insured against (e.g., a fire) makes the rental home uninhabitable, the tenant’s insurer may also cover the increased costs of a place to live until the tenant can move back in.

As with homeowner policies, renters insurance is usually a package of several types of coverage designed to cover more than one risk.

A typical renters insurance includes the following protections:

Damage to or loss of tenant’s personal property – Available coverage limits are usually $15,000 to $100,000. Replacement cost protection is usually available as an option to value at time of loss. Tenant policies usually offer deductibles from $250 to $2,500. Endorsements for property such as personal computer equipment, business property, jewelry, bicycles, and cameras are often available as an option.

Medical payments – This coverage covers medical expenses up to the limits in the policy for people who are on the premises of the rental property with the tenant’s permission and are accidentally injured and also extends to people accidentally injured by the tenant’s activities. The limit is typically $1,000 per person but higher limits of $3,000 or $5,000 can often be purchased.

Liability exposure of tenant – This coverage protects the tenant against certain risks per accident for bodily injury or property damage. Available liability limits are typically $100,000, $300,000, or $500,000. If sued, the policy will cover court judgments made against the insured and any legal expenses up to the limits of coverage.

Renter insurance also usually covers temporary living expenses if their rental unit becomes unlivable because of water or fire damage or any other covered peril.

A renters insurance policy is usually a “named perils” policy. If the tenants’ property is lost or damaged as a result of a covered peril, the insurance company will compensate them for their loss. Covered perils usually include the following:

• Fire or Lightning
• Windstorm or Hail
• Explosion
• Riot or Civil Commotion
• Damage by aircraft

• Damage by vehicle (not your own)
• Damage from smoke

• Vandalism or Malicious Mischief
• Theft
• Burglary
• Falling Objects
• Weight of Ice, Snow, or Sleet
• Sudden and Accidental Tearing Apart,      Cracking, or Bulging
• Freezing
• Sudden and Accidental Damage from      Artificially Generated Electrical Current
• Volcanic Eruption
• Damage from      steam-heating/water-heating appliances/systems
• Leakage or overflow of water or      steam
• Freezing of plumbing, heating, air      conditioning
• Short-circuit      damage caused by electrical appliances

Thus, for example, if the tenant’s home is broken into and their TV and computer are stolen, renters insurance has them covered

It’s important to note that, while most renter policies will cover tenants for water damage caused by broken pipes and overflow, they will not be covered for flood, mud, or earthquake damage. Tenants who live in a flood, mud, or earthquake areas will need to pay for extra for additional casualty coverage.

Tenants need to know that renters insurance is relatively affordable. For just pocket change a day, a policy can provide significant basic protection. The renters policy is relatively inexpensive compared to a homeowner policy because both policy limits and risks will be much less than for a homeowner. Almost all tenants have insurance on their motor vehicles and tenants may be able to cover an auto and get basic renters coverage for only a few dollars per month more than for just auto coverage alone because most insurers offer multi-line discounts.

As with all issues regarding management, landlords must apply the insurance requirement to all tenants in order to avoid fair housing violation claims. To be safe, this would mean applying the requirement to leases executed, renewed, or extended after the decision is made to institute the requirement. For month-to-month tenancies this would mean as soon as allowed by state law.

Question

NY state law requires at least a 30 day notice to terminate by tenant.  My tenant moved with no notice.  Can I Keep the Deposit?

Answer

Whether you can “keep the deposit” may depend on the details of the matter. In general, in most circumstances the landlord can keep amounts from the security deposit to cover unpaid rents, damages to the property, and additional expenses incurred from breaking the lease agreement. Since you mention the lack of a 30-day notice from the tenant, I assume that the tenant was on a month-to-month lease. Accordingly, if the tenant was otherwise current with payment of rent, the maximum lost rent would be 30 days’ worth from the date of breaking the lease. That is, if the tenant left within the month that had already been previously paid for, the unpaid rent would be less than the monthly rent amount. If you had a deposit equal to the monthly rent, you could apply any remainder to physical damages, not including normal wear and tear.

Most states, including NY, have abandoned property laws. Laws regarding tenant property left behind vary significantly among states and for many states improper handling of tenant property can be costly for the landlord.  Requirements vary from none at all to the need to securely store the property, publish notice of its future sale date, and return to the tenant any excess realized from the sale, with even more complicated procedures in some jurisdictions.

Financial and physical damages that exceed the amount of security deposit are theoretically recoverable through a lawsuit if you can find where the tenant is currently located so that he/she can be served with a complaint and can obtain a judgment in the court of jurisdiction.

As with many matters related to tenants, landlords must also adhere to any more stringent requirements under county and municipal ordinances, including those in rent control jurisdictions.

Question

What is PALS (prior address locator service)?

Answer

Tenant screening should include some information reqarding renter history of applicants rather than only credit history, eviction history or criminal background history.  It can also include previous address history information as well.

In the past, a landlord had to check renter history addresses by calling previous landlords as listed by the applicant.  This was not only time-consuming, but was often unreliable when applicants provided phone numbers of friends as references.  Now there is PALS (Prior Address Locator Service), which can confirm previous addresses and providea a way to directly find previous landlords for those addresses via official public records.

Youcheckcredit.com provide PALS either as part of special packages or as an individual report.

Question

In the State of Ohio, is a landlord required to
pay interest on a security deposit to a tenant that has left the home?

Answer

You do not state if the tenant left at termination of the lease period, without a required notice, or by breaking the lease agreement, issues that may or may not have implications for your case.

It is my understanding that Ohio law regarding interest on security deposits is as follows: A security deposit in excess of $50 or one month’s rent, whichever is greater, must bear interest on the excess at the rate of 5% per annum if the tenant remains for a period of 6 months or more. The interest must be paid at least annually as well as upon termination.

I’ll also mention that Ohio requires a landlord to provide an itemized accounting of deductions from the security deposit and to return the remaining amount within 30 days.

Pets in Rental Housing – Part 1

In this Part 1 of a multi-part series, we’ll discuss some basics related to landlord pet policy. In future parts of the series, we’ll discuss in more detail some of the issues mentioned in this first part as well as discuss a variety of specific legal and management issues related to pets.

Pet ownership in the United States continues to trend upward, with some market analysts predicting continued rises in number of the number of households that have pets and the number of pets per average household. Pets have become a more important issue for landlords because more tenants wish to have them than was the case decades ago While there are no available statistics on the ratio of pet owners who rent, a very conservative estimate is that more than 50 percent of renters own pets. Many tenants do so in spite of prohibitions against it in lease agreements. For a number of years now, pets have been increasingly regarded as family members and renters carefully search out living arrangements and amenities suitable for their entire family. A pet friendly atmosphere is a higher priority than a private parking space for many families.

Consumer demands for pet services and amenities are correspondingly on the rise and new or enhanced market opportunities exist to capture this demand. The rental housing industry is making changes in response to the growing demand for pet friendly housing. Property managers and landlords are adjusting their rental policies to provide pet friendly options to attract and retain tenants with pets.

Studies have shown that rental housing located in neighborhoods with nearby community parks and greenbelts, veterinary facilities, pet specialty stores or other establishments offering pet products and services are perceived more favorably when compared to rental properties in other neighborhoods without such features. This can influence pet owners’ rental decisions in deciding where to live. Pet friendly housing can be as accommodating and attractive as the property manager/owner’s attitude and rental policies.

New apartment construction is being designed to provide options for pet friendly spaces, amenities, and services such as a dog run, bark park, onsite pet daycare, pet spa, pet grooming, pet sitters, dog walkers, or concierge services. Existing multi-family housing has eased away from the restrictive policies of the past toward a more cooperative, accommodating relationship between management and pet owner tenant.

Pet friendly housing is a growing niche market that is underserved in many areas. Renting to pet owners may make good business sense. Landlords may receive the benefits of additional rental income and potentially fewer and shorter vacancies.

Rental surveys in some areas currently show that three out of four rental households have pets. Despite this high number, surveys in those same areas also show prospective renters still have difficulty in locating pet friendly housing. Market potential is there for those providers willing to take advantage of the opportunity.

While rental policies will continue to focus attention on people friendly services and amenities, value added pet policies will be implemented to accommodate the needs of a growing market segment of renters. A policy of renting to those with pets can bring additional income revenue for rents and deposits and increase applicant pools and market share.  Consider that:

• Vacancy rates for pet friendly housing can be much lower than “No Pets Allowed” housing
• Vacancies for pet friendly properties usually rent faster than non-pet friendly properties
• Tenants with pets are more likely to remain in the rental for longer terms
• Pet policies are an important factor for renters with pets in deciding where they want to live
• Pet deposits are common rental policies to help reduce risk
• Monthly pet fees are in addition to monthly unit rents
• Rents have potential to set to market rent for added amenities

Understandably, pet friendly housing does carry some restrictions necessary to protect and preserve property values, to allow for safety and quality of life for other tenants, and to consider the public in general. The most common restrictions are the number of pets allowed per household and for dogs, the breed, the size (weight and height) of the pet, and proof of required licensing and vaccinations. Note that size and weight for dogs is seldom an indication of pet damage potential. Although large dogs could theoretically do more damage, many large dogs are more docile than many small dogs. Some breeds of small dogs are notoriously nervous and prone to cause lots of smaller damages.

While pet-friendly housing is not without certain costs, with customary due diligence for tenant screening and selection and adequate documentation, most rental housing providers would find that the positive benefits of pet friendly policies are far greater than initial costs for set-up and maintenance.

A pet friendly housing policy does not mean all tenants will have pets. Some tenants like pets but choose not to have one at the time of lease signing. Renters without pets and renters with pets can co-exist peacefully as long as rental policies and standards are fairly enforced among all tenants.

Fair Debt Collection Practices Act Issues – Part 1

Most landlords will collect debts at various times during their careers as owners of rental properties. This is true even when a landlord tries to do everything right – including employing methodical and detailed screening procedures.

A common misconception regarding debt collection legislation is that it benefits people who willfully refuse to pay their valid debts. However, studies of consumer debt show most consumers who obtain credit fully intend to repay their debt. When credit defaults occur, it is generally due to an unexpected life event.

The unforeseen events of unemployment, serious illness, or divorce sometimes make it difficult to fulfill credit obligations no matter how much the debtors, including tenants, would like to do so. If the consumer has already overextended his/her ability to repay debt, financial disaster may occur when such events occur. In attempts to collect past due accounts, some debt collectors have used aggressive tactics that denied debtor’s rights, invaded privacy, and misrepresented material facts.

The federal Fair Debt Collection Practices Act requires that debt collectors treat consumers fairly and prohibits debt collection abuses and invasions of individual privacy. Failure of the landlord to obey the restrictions within the Act can result in costly consequences.

Fair Debt Collection Practices Act

Title VIII Fair Debt Collection Practices Act (FDCPA) is a federal law that was enacted in 1977 to amend the Consumer Credit Protection Act to prohibit abusive practices by debt collectors. Alarmed by the increased number of incidences of abusive collection practices that harmed consumers through emotional distress, invasion of privacy, damaged reputations, intimidation, and forced personal bankruptcies, Congress created guidelines for the conduct of business by debt collectors, defined the rights of consumers in dealing with debt collectors, and imposed penalties for violations of the Act. The Act provides protections and remedies for debtors while allowing debt collection agencies to collect legitimate debts.

The purpose of the Fair Debt Collection Practices Act is to:

• Eliminate abusive debt collection practices by debt      collectors;
• Insure that those debt collectors refraining from      using abusive debt collection practices are not competitively      disadvantaged; and
• Promote consistency among states regarding consumer      protection against debt collection abuses.

The FDCPA is the national standard for collection agencies and is enforced by the Federal Trade Commission (FTC). A full copy of the Act and related information may be found on the FTC web site.

While some critics have labeled the Act complicated and difficult to follow, the provisions of the FDCPA fall into standards of common sense and common courtesy. Legitimate debts can be collected without threats, harassments, or unfair practices. The FDCPA guidelines provide collectors with specifics on what not to do and what must always be done in their communications with debtors. Debtors are provided guidelines to dispute outstanding items as well as remedies to address collectors who violate the law.

The Fair Debt Collection Practices Act restricts coverage to personal and non-commercial transactions of consumer debt. Debt is defined as the obligation or alleged obligation of the consumer to pay money arising from a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purpose, whether or not such obligation has been reduced to judgment. Common examples would be purchase of a vehicle, medical treatment, retail financing, mortgages, credit card purchases, and of most immediate interest to landlords, rent and damages related to rental of residential housing.

The Act specifically addresses consumer debt and thus debts owed by businesses would not be regulated under the Act. However, if a business extends credit to its customers, or allows the purchase of goods and services on account, the business owner should be aware of the customer’s rights under the provisions of the Fair Debt Collections Practices Act. Any action taken by the business owner should be in conformance with FDCPA provisions.

The act has specific meaning to owners of residential rental property owners and/or property managers of such property who in the course of business extend credit to tenants for occupancy rights. Landlords and property managers must be fully compliant in their collections efforts regarding payments of rents and legal procedures for evictions.

There are some debt collection activities that are not covered under FDCPA. A creditor that collects its own overdue accounts is generally not subject to the federal provisions. In other words, the FDCPA generally applies to third party debt collectors, not to the original creditor. A debt collector is any person who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. The term includes any creditor, who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. Some states, however, have consumer protection laws which include original creditors, so landlords must be knowledgeable about both federal law and the statutes of their particular states.

Rent collection activities by a rental property manager are generally not covered under FDCPA because in most cases the property manager works for the property owner. However, if the property owner uses an attorney to collect unpaid rent and the attorney regularly collects unpaid rent for other business owners, then the collection activities will fall under provisions of the FDCPA.

The activities of government employees whose official job responsibility is to collect debts are not covered under FDCPA. Such activities might be collection efforts for student loans or for debt owed to the Internal Revenue Service. If, however, the debt collection is outsourced to an outside agency, then provisions of the FDCPA would apply.

Two other examples of activities not covered by the FDCPA are (1) process servers in their efforts to attempt to serve a copy of a court order for enforcement of payment of debt and (2) consumer counseling services that are non-profit organizations and receive payments from the debtor for distribution to the creditors.

Again, we remind you that the FDCPA is not the only law that regulates debt collections. Some states have collection laws that offer greater protections to consumers than does the federal law and cover a broader range of debts. For example, California law applies to not only third party collectors, but also to creditors that collect debts for themselves. Certain states have limitations on the number of collection calls a consumer may receive during the year.

While there is no federal license or registration for collection agencies, some states require debt collectors to register or apply for a state license. Bonding may also be a state requirement. In some situations, the laws of more than one state must be taken into consideration if the debt collector is located in a different state than the debtor’s state.

More information regarding state collection laws can often be found on the web site of the state, of the office of the state’s attorney general, or of the state’s consumer protection agency.

Future parts of this series will provide additional discussions regarding regulations related to debt collection.

Do You Have Possession?

Whether the tenant left at the end of his lease term, terminated his lease early upon mutual agreement, or left in the midst of his lease term without even telling you, the fact is you have a vacancy. However, what you can or should do next can depend on how the vacancy occurred as well as what might have been left behind.

There are a number of potential issues regarding landlord possession of a rental unit and landlords do not always consider the ramifications of assuming that the tenant has returned possession when that was not the tenant’s intent.

There are also issues regarding tenant personal property still on the premises after it appears that the tenant has moved out.

What a landlord can do or must do when there is any question regarding the tenant’s intent to vacate varies significantly among states. Accordingly, while we will in this article provide discussions about some of the issues, landlords must research and understand the laws of their particular states.

Who Is In Possession?

The landlord should consider the issue of possession whenever there is any question as to whether or not the tenant has truly vacated the premises, that is, he intended to relinquish possession back to the landlord.

This is especially a problem when a tenant appears to have abandoned the unit without any notice, but has left some belongings behind. The problem is knowing whether the tenant has permanently left and intended to leave the belongings for disposal by the landlord or, instead, plans to return at a later date to retrieve the belongings, even to re-occupy the unit because the tenant did not intend to relinquish possession of the premises. This can still be an issue even though the tenant is not current with rent because the right of possession exists independent of paying rent unless a court ordered eviction has been completed.

Accordingly, a landlord should not take possession of the leased premises unless and until he/she is sure that the tenant intended to relinquish possession of the premises. Doing so otherwise can expose the landlord to various potential problems.

Following proper procedures causes delays of a few days, even a couple of weeks, and delays in collecting rent from a new tenant means lost income. However, failure to follow the laws of your state can result in problems, even result in being sued by the departing tenant. Accordingly, before worrying about what to do regarding filling a vacancy, you need to be sure that you have legal possession of the unit. That is, you need to be sure that the old tenants have no possession rights. In some states, one must even use care in entering the unit when not certain as to the tenant’s intent and plans.

The question of whether the tenant has actually given up possession usually becomes an issue when the tenant appears to either (1) be holding over after the expiration or termination of a lease or (2) to have abandoned the premises in the midst of the lease term.

In the first case, extra caution is warranted if the tenant has not (1) turned in keys, (2) written or at least phoned to confirm vacating or a planned immediate departure, (3) given any other indication of certain vacating, or (4) removed all belongings from the property without mentioning that he intended to leave the items for disposal by the landlord.

In the second case, the tenant appears to be no longer living at the property even though time remains on the lease, perhaps even time for which rent has been paid, and some of his/her personal property may remain on the premises.

Statutory Possession

When a landlord is considering whether or not he/she has gained legal possession of a rental unit, he/she must be aware of any specific requirements in the statutes of his state. Such possible requirements vary significantly among those states which have them.

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).

An “abandonment” procedure typically requires that rent has not been paid for at least some period after it was due (e.g., 10 days) and the landlord had been unable to contact the tenant for some period (e.g., 7 days). The landlord can then (and only then) post an abandonment notice on the door stating that he/she will be taking possession of the unit at some date (e.g., 5 days later). All periods must be as specified by the statute of the particular state. Although such a statute significantly delays getting the unit ready for a new tenant, failure to follow the statute can put a landlord at risk.

Of course, any personal property left on the premises must be dealt with as required by the state’s abandoned property laws, as discussed later.

Minimizing Possession Issues

Minimizing questionable vacancy issues begins with the lease agreement. Absent any statute prohibiting it, the lease agreement should contain a clause(s) that specifies the length of time that the tenant may leave the property without prior notice to the landlord (e.g., 7 or 10 days ) and provides that the unit may be considered abandoned if such notice was not provided. The clause should meet any statute requirements that might exist.

One must, of course, take great care when utilizing such a clause because there could be a lot of reasons why a tenant failed to give the required notice. For example, the tenant is in the hospital ICU following a heart attack or an auto accident. Accordingly, a landlord must make some effort to track down the tenant or information regarding the tenant. Efforts might include calling the tenant at his place of employment and/or the emergency contact and/or any personal references that should have been provided with his application.

The lease should also contain a clause(s) regarding procedures for vacating and what actions might be taken by the landlord if procedures are not followed, including any required by statute. That is, words as to what the tenant must do when vacating and what will happen if the tenant fails to act as agreed.

For example, in order to provide definitive knowledge of when possession has transferred, a clause could state that all belongings must be removed and keys must be returned when the tenant has fully vacated and that failure to do both will result in (1) continued accrual of rent and any relevant late charges, (2) charges for the costs of disposing of the abandoned belongings, and (3) a locksmith charge.

Some states have statutes that define how a landlord may proceed to recover possession when the tenant appears to have abandoned the premises. When your state defines such procedures, the lease agreement should include the procedures as defined in the statute.

Certainty about vacancy can also be enhanced by regularly monitoring the property beginning a short time before the tenant is expected to be vacating. It can be useful to stop in when it appears that the tenant has nearly finished loading the truck. At this time, you can confirm intent, mention the need to return the keys, and remind the tenant of the lease clauses and the penalties for failing to follow the procedures. If possible, have the tenant’s lease agreement with you when doing this. Furthermore, if possible, a signed written agreement listing what is being left behind and stating that the tenant understands that he will be charged for disposal would be very useful. At a minimum the landlord should write a memorandum regarding the visit and the discussions.

Sometimes a landlord has information to indicate that tenants are leaving well before the end of a lease – i.e., breaking the lease. Either the landlord has been monitoring the property and has noticed evidence of a planned move or another tenant or an adjacent property owner or tenant has voiced suspicions or actual knowledge of the possible departure to the landlord.

In this case, immediately talk with the tenants and make sure that they understand the implications of breaking the lease and the potential impact on their ability to rent or buy a home in the future. Consider negotiating mutually acceptable terms of lease termination. It is better to obtain quick and clean possession rather than have disputes after the fact even if you must give up some rent. If the tenant is leaving before the end of the period for which rent has been paid, doing this can provide a head start on preparing the unit for a new tenant. The negotiated terms should be in writing and include clauses regarding paid rent, possible forfeiture of some or all of the security deposit, and abandoned items.