Income – What Is & What Isn’t

Landlords take in money, some being taxable, some not. In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. There are other receipts that are not rent including deposits and vending machines amounts.

Rents                                                                                    

You generally must include in your gross income all amounts you receive as rent. Rental income is any payment you receive for the use or occupation of property.

When to report – When you report rental income on your return depends on whether you are a cash basis taxpayer or use an accrual method. If you are a cash basis taxpayer, you report rental income on your return for the year you actually or constructively receive it.

You are a cash basis taxpayer if you report income in the year you receive it, regardless of when it was earned. You constructively receive income when it is made available to you, for example, by being credited to your bank account. If you use an accrual method, you generally report income when you earn it, rather than when you receive it. You generally deduct your expenses when you incur them, rather than when you pay them. For more information about when you constructively receive income and accrual methods of accounting, see IRS Publication 538 (“Accounting Periods and Methods”).

Advance rent – Advance rent is any amount you receive before the period that it covers. Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. For example, you sign a 2-year lease for your property and receive $800 for the first month’s rent and $800 as rent for the last month of the lease. You must include $1,600 in your income in the first year as well as any other rents received during that calendar year.

Other rent related receipt – Some receipts that are related to rent can be included in rents. Late charges are probably the most-often received income in this category.

Deposits

Do not include a security deposit or other truly deposit amounts in your income when you receive it if you plan to return it to your tenant at the end of the lease absent any claim for damages or unpaid rent at the end of the lease. Non-refundable fees, even if called deposits must be reported in the year received.

However, if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. If an amount is to be used as a final payment of rent, then, even though called a security deposit, it is advance rent that must be included in your income when you convert the deposit to rent.

Payment for Canceling a Lease

If your tenant pays you to cancel a lease, the amount you receive is rent and must be included in your income in the year you receive it regardless of your method of accounting.

Expenses Paid by Tenant

If your tenant pays any of your expenses the payments are rental income. You must include them in your income. You can deduct the expenses if they are deductible rental expenses although there can be cases where the payments are income but the amount must be capitalized and depreciated over a number of years.

As an example, the furnace in your rental property stops working while you’re out of town and your tenant pays for the necessary repairs and deducts the repair bill from the rent payment. Include the repair bill paid by the tenant and any amount received as a rent payment in your rental income. You can deduct the repair payment made by your tenant as a rental expense.

As another example, your tenant pays the water and sewage bill for your rental property and deducts it from the normal rent payment. Under the terms of the lease, your tenant does not have to pay this bill. Include the utility bill paid by the tenant and any amount received as a rent payment in your rental income. You can deduct the utility payment made by your tenant as a rental expense.

Although one could not include as income the amount paid by the tenant and not deduct the amount on an income tax return, it is usually better to do both in order to provide a paper trail of what actually occurred.

Property or Services

If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary.

For example, your tenant is a painter and you accept his offer to paint your rental property instead of paying 2 months’ rent. Include in your rental income the amount the tenant would have paid for 2 months’ rent. You can usually deduct that same amount as a maintenance expense.

Some Questions & Answers

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Q1

Will a lien on your property hurt your credit score?

A1

Anything that is a matter of public record, which a lien will be if/when recorded, will affect one’s credit record if credit bureaus discover it when checking records in the county where recorded. Although it might take days, even months after the lien is recorded for it to appear in a credit report, it is almost certain to eventually appear.

How much it affects one’s credit record in general and score in particular will depend on both the type of lien involved and the other items on which the score is based. Liens can be filed by mistake or, for a mechanic’s lien, because of a dispute with a non-performing contractor. Although the risk score will be affected in accordance with the algorithm by which the particular risk score is calculated, the degree to which a lien affects a particular person in any given transaction will depend on the type of lien, why the lien occurred, the purpose of the credit report, and whether the person/business being asked to grant credit is able and willing to consider those specifics.

Liens can often be removed by showing the liening party that a mistake has been made. For example, a state income tax lien can likely be removed by showing the taxing authority that one was not a resident of the state, was not employed within the state, and performed no self-employment activity within the state during the tax year for which the tax lien was filed. As another example, a mechanic’s lien can be removed by showing that the lien was improper due to insufficient notice or filing against the wrong party. Paying off a valid lien should also be taken into account by the risk score provider and/or the potential grantor of credit.

Further discussion cannot be provided without knowing specific facts, including the type of lien involved.

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Q2

I’m confused by the eviction process in the state of New York. Based on the forms provided for NY state there is no 3 day notice. Please clarify if that notice is required. Thank you

A2

For some states there is not a form titled “X-Day Notice” (with X being the number days required for the tenant to pay the rent, cure other types of defaults, or surrender the premises to the landlord). For those states a generic form must be filled in so as to work for any notice to “do something or leave.” This is sometimes because a state has different notice period requirements for different types of terminations due to lease defaults.

Landlordonline.com provides three different such forms for the State of New York. They are:

1)    Notice of Termination of Residential Lease

2)    Notice of Breach with no Right to Cure Residential

3)    Notice of Breach with Right to Cure Residential

If you take a look at all three forms you will see that 1 and 2 do not give the tenant a right to remain even if he/she cures the default, whereas, 3 allows the tenant to remain in occupancy if the default is cured. It is my understanding that the only defined 3-day notice for NY State is that for a “Pay or Quit” notice and that the notice period for other lease defaults depends on clauses in the lease, except for regulated units for which it is 10 days. It is also my understanding that the City of NY allows ”unconditional quit” notices (1 & 2) only for the case of a holdover month-to-month tenancy.

If you are in need of a “pay or quit” notice, you would need to adapt notice 3 by adding the necessary words, including the amount that needs to be paid, as that is the only one which allows the tenant to remain after curing the default – in this case, paying the rent owed. An alternative would be to obtain a dedicated “pay or quit” notice form from some other source.

If you want to provide more detailed information about the matter, I may be able to provide additional help. However, I am not an attorney, I do not have personal knowledge about specific NY state laws other than what I find in my reference books, and I cannot give legal advice. Accordingly, I advise you to further check landlord-tenant law NY State (and of any local jurisdiction that might have more strict regulations) or seek the advice of a competent NY landlord-tenant law attorney.

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Q3

Can a landlord ask for a pet deposit in addition to a 1-1/2 month security deposit?

A3

The answer may depend on the state in which the rental is located, although some states do not cover this issue by statute, leaving it up to judges to decide if the matter goes to court. Some states consider a pet deposit to be part of the security deposit, with the total maximum being the maximum security deposit under state law. Other states do not have any limits on pet deposit or pet rent. Let me know the state and I’ll see if I can provide information.

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Disclosure Issues – Part 1

Once upon a time and throughout the land, the basic rule of buying anything, including real estate, was “Caveat Emptor” – that is, “Buyer Beware.” In more general terms it was consumer beware and applied to a purchaser of any product or service. The seller or landlord had no responsibility to disclose defects in what he was selling or leasing and had no liability for any problems the buyer or tenant had following the transaction.

Things have changed, particularly regarding real estate. Over the past several decades, the legislatures and courts have put more and more burden on sellers and landlords to fully disclose defects in the real property they are selling or leasing.

It is very important that adequate disclosure be made by sellers and landlords to buyers and tenants, respectively, in order to avoid (1) risk of misunderstandings and disputes and/or (2) violation of laws, either of which can be costly. While many disclosure issues are important only in sales transactions, other issues can potentially also be of concern in a leasing transaction. Adequate disclosure is far less time-consuming, costly, and stressful than is litigation.

Discussions in this article are based on general legal principles that apply to many states. However, as with most issues regarding real property transactions, one should know and understand the laws of his state and local governments and/or consult with a competent real estate attorney experienced in the particular area of law at issue.

Although states vary regarding protections provided to buyers and tenants, all states provide significantly more than was the case a few decades ago. Most states require disclosure of known defects and many require disclosure regarding certain specific issues.

Most states no longer allow a seller to escape liability for known defects by selling the property “as is” except for certain transactions such as foreclosures or sales by government agencies, for example, bankruptcy courts. Most states also provide for tenant protection against “as is” by statute and/or through the legal principle of “warranty of habitability.”

Many such laws usually apply only to residential properties. Typical disclosure laws require a seller to notify a buyer of certain things regarding the property’s physical condition, material defects, or major repairs that might affect a buyer’s decision to purchase the home. Some states have disclosure laws that require the seller or agent to reveal events such as crimes.

While there are issues specific to only a buyer or only a tenant, certain issues must be disclosed to both buyers and tenants. The latter includes the lead paint disclosure that is required by federal law for properties built before 1978 and, in some jurisdictions, by more stringent state and/or local laws. Furthermore, some issues are solely or more relevant to residential than to commercial properties.

The temptation to not disclose known material facts should always be resisted by sellers and landlords. Other than the fact that the failure could be considered misrepresentation or fraud, one should expect that the information will eventually be discovered by the buyer or tenant.

If discovered by the buyer or his agent before close of a sale escrow, it may result in cancellation or require renegotiation of the contract. This will result in loss of time and may even be costly, depending on the specific circumstances.

If discovered by the tenant soon after moving in, he may be able to legally break the lease. If a serious material fact that was known, or should have been known by the seller or landlord (or agent thereof) is discovered after it has caused injury or damage, the failure to disclose may result in a lawsuit against the seller or landlord (and probably any agent thereof), usually a costly event no matter what the outcome.

Seller Disclosures

A majority of the states require written disclosure of various issues that might be a material factor in deciding whether to purchase a property and how much to pay for it. In some of those states, the requirement is limited to residential properties of four or fewer units. If the buyer is represented by an agent, such a disclosure will likely be required by the broker even when not required by law.

Many states have also made disclosure of certain non-physical matters an issue, either through legislation or court decisions. For example, a buyer’s agent who has reason to believe that his client cannot perform for some reason could be held liable to the seller if the buyer cannot close escrow because of that issue, as could the buyer himself. Similarly, a listing agent could become liable to the buyer for the inability of the seller to close escrow because of an issue known to the listing agent, as could the seller himself. Examples include (1) the seller is planning to file bankruptcy and (2) a divorce is underway.

Courts have generally extended the idea of fair dealing to apply to buyers and sellers as individuals, whether or not a real estate agent is involved.

As a seller, if you have knowledge of a potentially material fact, disclose it as early as practical in order to minimize possible waste of time and money for all parties.

If you are a buyer, require written disclosure regarding all issues of material concern to you. Written disclosure serves two purposes. First, it points out potential issues before you spend the time and/or money to look for them. Second, it gives you additional legal recourse in the future if full and truthful disclosure is not made.

The disclosure statement should cover such items as known (1) zoning, building code, or permit violations, (2) utility services (including whether or not on city water and sewer), (3) soil stability problems, (4) environmental issues such as mold or asbestos, (5) prior significant damage to the property or any of the structures from fire, earthquake, floods, etc., and (6) any pending or potential legal actions involving the property.

Landlord Disclosures

Both habitability standards and disclosure requirements vary significantly among the federal, state, and local governments and their agencies and even among inspectors from the same entities.

Habitability Standards – As a result of shoddy and improper maintenance by landlords, American courts began to hold that there is an “implied warranty of habitability” in housing that is offered for rent. Many states have codified that concept by statute and landlords can now even be held criminally responsible for neglecting certain maintenance in some states. Both civil and criminal liabilities can be very substantial when related to health or safety issues, even when those issues are not explicitly covered by laws.

Habitability standards apply regardless of how low the rent is and require that rental units meet certain standards for safety, health, and cleanliness. The federal guideline standards are quite low compared to those of many states and local governments. The strictest of the different levels of government for the location of a property will be the safest standard to follow.

Types of disclosures – The types of disclosures required varies significantly among states. Examples of disclosure items required in some states include (1) the name of the owner and/or any other person authorized to receive legal papers, (2) the bank where the security deposit is kept, (3) any planned condominium conversion, (4) existence of illegal drug waste, (5) the landlord’s tax number that the tenant needs in order to file for the state’s low-income tax credit, (6) availability of an official registered sex offender database, and (7) existence of “dangerous” mold. In general, most states require disclosure of issues that could cause injury or substantially interfere with the tenant’s safe enjoyment and use of the property (e.g., asbestos) and under general legal principles, failure to disclose such things would increase risks in litigation related to them even if not an issue covered by statute or ordinance.

Landlords should disclose likely material facts, particularly those disclosures that are required by law, as early as practical in order to minimize possible waste of time and money by himself/herself and by applicants.

Rent controlled units – Rent control properties can have additional disclosure requirements. In most controlled jurisdictions, the tenant must be provided the name and address of the government agency or the elected board that administers the control ordinance.

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Q1

I had hired an auction service to clean out one of my vacant rentals. One of their workers used the basement toilet and caused an overflow which put 7″ of water throughout the ranch home. My insurance will cover all the structural damage and drywall replacement but my rental policy does not cover contents. There was furniture, a pool table and there are several boxes of goods that the auction company has boxed, but haven’t removed yet. Is the auction company liable for the damage to my furniture and contents?

It is their worker who left on Friday with the toilet running. There was nobody else in the house. They were hired to clean-out the house for the next rental. Actually, they were going to pay me for the items removed. Where do I go with my damage claim?

A1

You should attempt to get the vendor to pay for the damages. Depending on the amount involved, they may be willing to contribute towards part or all. However, if you tried to get me to pay under such circumstances, my initial position would be that the damages were the result of your failure to properly maintain the toilet and a judge could very well agree with me. The vendor likely flushed the toilet and immediately left the area as do most people. Few, if any hang around to confirm that the toilet doesn’t leak or run unless already aware of a potential problem. Returning to me being the culprit, the result might be different if you could prove I knew my use of the toilet was particularly risky. I would almost certainly be liable if you had told me not to use the toilet because it was defective, if you could prove I had reason to know there was a problem, perhaps even if the supply valve had been turned off and I turned it back on.

You should certainly determine whether or not they have insurance that will cover the problem, as most real businesses would have coverage for error or basic negligence. However, even if they do, their insurance company might refuse the claim based on the same argument I would have used.

If you are unable to negotiate an acceptable solution when you approach them nicely, you can decide whether you want to proceed with a lawsuit, taking into account the cost of a suit and your chance of winning. Your decision may depend on whether the amount of damages will allow you to use “small claims court” or will require a significantly more costly venue.

In general, a landlord should always have coverage for furnishings that are included with the unit. In my 33 years of management experience, damages to furnishings are just as likely (perhaps more so) to result from things such as leaking roofs, failed plumbing (such as your case), or broken water-using appliances rather than either accidental or purposeful tenant actions. I always included specific lease clauses that explicitly made the tenant liable for water damages caused by a tenant-owned washing machine or other water using item and for water damages caused by landlord-owned washing machines and dishwashers that were left unattended while in operation. Insurance coverage of furnishings should include events that are (1) acts of nature, (2) the result of plumbing and appliance failures (whether the fault of tenant, landlord, or an agent of the landlord or tenant), or the theft or malicious damage by any party other than the landlord.

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Q2

If I want to remove a lodger from my property, can I do so immediately or is he entitled to a certain number of days notice?

A2

It will depend on which state you’re in and whether he is really legally a “lodger” as defined by your state’s law or instead legally a guest or a tenant. In most states there are specific facts regarding the occupancy that will determine the proper classification. The name given to the occupant’s residency is irrelevant. There are certain factors that can change a guest into either a lodger or a tenant or change a lodger into a tenant. Whether you need to give a certain number of days notice and even the number of days that might be required will likely depend on the correct classification of his occupancy. I would need to know more details in order to provide an answer.

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Q3

I need a form to extend a lease.

A3

We do not have a form to extend a lease, at least for the several states that I checked. However, it is not difficult to create an amendment document to change anything regarding the lease. Simply include information identifying the existing lease (names of the landlord and the tenants and the date of the lease), the date of the amendment, what term or terms are being changed, and a statement that all other terms of the lease remain unchanged. You could also have all parties sign a new lease using your existing form. Be sure that the same parties that signed the existing lease agreement sign the amendment or new lease.

In general, when changes are being made to a lease you can always either amend the lease 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. 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. However, again, there is nothing to stop you from using a new lease if that seems easier to than creating a new document.

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Screening Prospective Tenants

Choosing a tenant to fill a rental vacancy is a critical decision for any landlord. Those landlords that “choose well” often sleep better at night than those landlords who are forced to “choose often” because the first tenant did not work out. As those landlords that choose over and over again find out there are no do-overs, only start-overs, a time consuming and expensive process.

For many reasons, not the least of which is to reduce income loss, a landlord needs a reliable, consistent system of attracting prospective tenants, adequately screening applicants, properly selecting a qualified tenant, and retaining good tenants. For those that choose often, it may seem like a case of easier said than done. However, those who choose well reply that it may not always be easy, but it is simple. They develop a system specific to their business and follow that process each and every time a vacancy occurs. Repetition is not the key here, but rather understanding the filling vacancy process, analyzing what works and what needs to be changed, and incorporating necessary changes or additions for future vacancies.

As a first time landlord you probably researched the subject of tenant screening and drew up an initial plan that you followed. As you gained experience you probably continued to work according to plan but made more allowances as markets, rents, and economies fluctuated. Now you may just know what to do, which may or may not be the same process you initially designed. If you’ve gotten away from following your plan, we suggest you take a few minutes to review the primary objective for filling your vacancy – namely  to choose a good tenant who will pay the rent on time, maintain the property in good condition, be a good neighbor, and not cause problems for you. Having a good system in place is not a guarantee of choosing a good tenant; however, it does maximize your chances. With a plan in place you are not likely to forget an important screening, rush to judgment, or become emotionally involved with the prospective tenant’s situation. Your goal is to make a good business decision, one that protects your investment and does not incur liabilities or violate the law. If your existing plan needs updating, be sure it covers the real life lessons (the worst tenant scenarios you’ve dealt with over time) with appropriate lease clauses, screenings, deposits, etc.

Your system is only as good as the foundation it is built upon. That foundation is business law and landlord-tenant laws. Without a firm understanding of applicable federal, state, and local laws, you cannot properly (and legally) set your rental policies and practices. You have a responsibility to keep current with laws. Almost all aspects of rental property management are regulated by laws at some government level, some aspects at multiple levels. As new laws and more restrictions are proposed, the administrative side of landlording may become more burdensome. Knowing the laws, understanding the laws, and complying with the laws can prevent unnecessary legal problems and financial penalties. Knowing the laws can also help you defend against applicant fraud or illegal tenant activities.

As cornerstones of your system, your written documents – the lease, application form, and rent rules – should reinforce your policies and practices. These documents spell out your expectations of a tenant. The lease sets forth the contractual basis of the landlord-tenant relationship and together with the landlord-tenant laws of your state defines the duties and responsibilities of landlord and tenant. Applicants need to know what your rules are – e.g., parking or use of property amenities – in order to decide, even before submitting an application, if your property suits their needs. Landlords should also remember that they themselves as prospective landlords are being screened by prospective applicants.

You will need to establish qualification criteria before you can select a tenant. You can be as choosey as you want to be or willing to take risks in setting your standards. However each and every applicant must be judged against the same standards. In this one instance applicants are all the same. There can be no deviation or variance in your qualification process – every applicant must be treated the same. Federal, state, and local anti-discrimination laws are very specific as to what you can do in screening applicants. You are free to choose your next tenant from prospective applicants as long as you base your selection on legitimate business criteria. For example you can reject applicants with insufficient income to meet rent obligations, have credit histories that show serious delinquencies or collections, are known to have caused property damage at a prior rental address, or cannot meet requirements for security deposits or fees.

Federal Fair Housing laws prohibit discrimination against the protected classes of race, religion, national origin, sex, color, familial status, or disability. State and local fair housing laws may have additional protected classes and thus be more stringent than federal law.

You will need to decide the logical progression of the screening steps to qualify your applicants. Your first screening is always to verify identity. The next step is to review the completed application. Some landlords prefer to run credit reports on all applicants, while others prefer to contact landlord references regarding prior rental history before spending money for a credit report. However, early in the qualification process you will need to verify current employment or other income sources to establish if there is sufficient means to meet rental obligations and ascertain that the applicant has adequate cash resources to pay the security deposit, utility deposits, the first month’s rent, and other costs of moving into your rental unit. This is usually best accomplished by providing upon first contact with applicant written information regarding costs rather than by requiring proof of cash availability. If the applicant just can’t afford it, there is no reason to conduct further screening.

Initial screenings (identity, rental history, employment/income) being done, you’ll want to know a little more about the applicant’s background. This type of screening can include credit history, criminal conviction records search, public records search, eviction records search, and reference checking.

All screenings should be conducted on every applicant of legal age. While the costs of checking multiple occupants can seem burdensome, some of the expense, if allowed by state law and under certain restrictions, can be offset by charging an applicant deposit. This can work to the landlord’s advantage, but conversely, requirement for excessive application fees can reduce the pool of qualified applicants. Accordingly, you may need to absorb part of the processing expense.

You will almost certainly use a tenant screening vendor to conduct your background screening reports. While public records are, well public, personally checking the various types of records thoroughly would require significant time and effort on your part, particularly if your applicant has lived in multiple locations. Entering location data into an online form provided by a screening service is certainly much easier and more cost-effective.

The ease and availability of information that can be provided by a screening service is a real benefit to busy landlords. Also, the quicker applicants are qualified per your standards, the sooner the vacancy can be filled. However, being in too much a hurry to install a tenant (without being satisfied that this is indeed the tenant you want) can end up costing you more than an empty unit.

In our opinion, screening services provide the most efficient and effective means to conduct thorough searches for credit and criminal conviction history. Report formats may vary from vendor to vendor but most are quite detailed and provide sufficient information to aid landlords in their qualification of applicants. Selecting a screening service requires due diligence on your part to ask questions and review sample reports to determine which service meets your business needs. Once you have selected your vendor and signed up for services, it’s simply a matter of choosing the reports you want, entering applicant data, and retrieving your report. While the final determination is entirely your decision, many services offer rental recommendations that you can accept or use as guidance in your decision.

Q1

My tenant and I want to renew a 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 addendum to the existing lease?

A1

It is an “amendment” rather than an “addendum” that you are considering using.

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. 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 states that all other terms of the lease remain as before.

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Q2

I have a male applying for a 1 bedroom unit. Is it legal to rent to him if his 2 children (1 male, 1 female) stay with him on weekends?

A2

I can’t at the moment think of any specific reason why it would be illegal for a man’s children of any gender to visit him on weekends as long as the apartment is habitable and presents no known health or safety risk. In fact, one must be very careful about making any restriction related to “familial status” of applicants or existing tenants, as doing so might be considered a violation of federal fair housing laws (and similar, often more restrictive, state or local laws).

Unless you have some specific knowledge based on factual evidence that would lead you to believe the children would be in danger, you probably have no right to question the matter.

Lease agreements usually have and should always have a clause that deals with visitors. Such clauses usually state that visitors may not remain longer than some number of days during a defined period – for example, a maximum of 2 weeks during a 6-month period. Such clauses sometimes require registration of visitors when staying longer than a specified time and often add an additional rent amount when the stay lasts longer. However, imposing such restrictions on children of a tenant could risk discrimination claims.

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Q3

I am renting a commercial building for our business. The roof leaked and destroyed some tool parts. Plus, I pay for the labor necessary to clean the water up after rain or after snow melts. Is my landlord liable for damages?

A3

It will likely depend entirely on words in the lease agreement. For residential rentals, many things are controlled by state and/or local laws because the government seeks to protect consumers of which most are not knowledgeable enough to protect themselves when entering into contracts. However, for commercial rentals the government assumes that tenants who operate businesses are capable of looking out for themselves or will hire an attorney to protect themselves. Accordingly, commercial lease agreements are allowed to have much more flexibility regarding terms to which the landlord and tenant might agree.

The bottom line is that you must carefully read your lease agreement to see if there is any clause that might relate to the matter of concern. For example, you may actually be responsible for maintaining the roof yourself, a not uncommon thing in commercial leasing.

If there is absolutely nothing in the lease agreement that makes you responsible for the roof, then you might be able to pursue collection of damages from the landlord. If you cannot negotiate a settlement with him and consider it is necessary to file a lawsuit regarding the matter there are numerous circumstances that might affect your chance of winning in court. For example, even if you are not explicitly made responsible by the lease, if you had knowledge of the roof leaking or even to suspected that it might leak (e.g., water stains on the ceiling) prior to the subject event(s) that caused damages or extra expense and did not take steps to protect your belongings, this would likely reduce your chance of winning. This would be even more against you if you had not provided notice to the landlord of your concerns regarding possible problems and could prove you did so.

Commercial leases often contain clauses that indemnify the landlord against such problems. Commercial tenants are also expected to protect themselves by having their own adequate insurance coverages against damages and losses, no matter whose fault.

If your lease agreement contains relevant clauses, then those clauses will govern the matter. If you find clauses that you think might be relevant and need an opinion regarding them, you can post again with that information and I can attempt to provide additional input.

Increasing Landlord Workload

Each year landlords’ lives become evermore complicated due to federal, state, and local governments enacting new laws related to both being involved in any type of business as well as related specifically to ownership of income properties. Landlords must be concerned about lead-based paint; mold; bedbugs; fair housing and ADA; the FCRA; the FDCPA; state landlord-tenant laws; credit screening record handling under FTC regulations; a variety of business taxes, income tax, property taxes, and, in some jurisdictions, rent taxes; employee vs. independent contractor issues; insurance coverages and costs; and whether tenants will pay their rents next month.

Recent Supreme Court decisions will likely now further increase the complexity of landlording for all those who manage income properties, even more so for those landlords and property management companies who hire employees.

In May 2011 the U.S. Supreme Court issued a major ruling affirming the right of a state to pass legislation penalizing employers who knowingly hire illegal workers. Arizona was the state whose law was affirmed. The Arizona law provides for revocation of business licenses of offending businesses, with the term “business licenses” considered to be very broad.

At the local level, in September 2010 the Third Circuit U.S. Court of Appeals had stopped city leaders in Hazleton, Pa. from enforcing a new ordinance prohibiting employers from knowingly hiring illegal aliens. The subject city ordinance also sought to prevent landlords from harboring illegals in their rentals. The city was attempting to stop a population explosion of illegal workers who don’t pay local income taxes.

The Hazelton case will now be sent back to the Third Circuit Court of Appeals with instructions to review the matter given the court’s ruling in a nearly identical Arizona case that the Supreme Court had resolved in May.

The required use of the federal E-Verify database when hiring was the focus of both cases. This data base tracks the immigration status of millions of people. The Supreme Court, in a 5-3 ruling, said state governments can force the use of the system even though Congress has never mandated its use.

Kris Kobach of the Immigration Reform Law Institute told the court “Hazleton’s ordinances match the terms and classifications of federal immigration law and require officials to defer to federal determinations of aliens’ immigration statuses,” adding “In drafting the ordinances, the city made every effort to avoid any conflict with federal immigration laws.”

It’s the same argument Arizona’s lawyers made when their case went before the Supreme Court and is one that Chief Justice John Roberts and four of his colleagues agreed with. Roberts wrote last month “(Federal law) expressly reserves to the states the authority to impose sanctions on employers hiring unauthorized workers, through licensing and similar laws. In exercising that authority, Arizona has taken the route least likely to cause tension with federal law.”

During the past decade there has been legislation in various state legislatures and some ordinances at the local government level, all attempting to deal with employment of and rental to illegals. Most attempts have been struck down in lower courts for one or more reasons. While some states and local governments have continued to move forward on such laws, many states and local governments have hesitated to pass such laws, preferring to wait until the Supreme Court clarified what might pass muster and what won’t.

In view of the Arizona law Supreme Court decision and the likelihood that the Third Circuit U.S. Court of Appeals will now change course, it should be expected that many states and local governments will be passing laws regarding both employment and rental issues. Accordingly, landlords must be certain to keep informed about legislation and ordinances being considered in jurisdictions where their properties are located. Landlords should also be sure to follow laws currently in place to ensure that they are not found in violation of old laws when enforcement of new laws is in place, perhaps with more rigorous enforcement. For example, current law has long (since 1986) required the use of USCIS Form I-9 when hiring employees.

Q1

How many days is a tenant’s visitor allowed to stay?
A1

It depends on whether the lease deals with the subject. If it does not have a lease clause specifying a limit, you may have trouble enforcing any limit. If the issue went to court you’d have to convince the judge that there should be a restriction under the legal principle of equity.

A lease agreement should always contain a clause dealing with this issue. Having such a clause provides a clear violation of the lease agreement if a tenant tries to move someone in for a longer period. However, the limitation should be reasonable. If the matter went to court, the definition of reasonable would likely depend on the judge’s personal standard. Typically, such lease clauses limit the number of nights a visitor may stay during a specific period without the landlord’s written permission. This might be 3 days within any 30-day period, 10 days within any 6-month period or 2 weeks within any 12-month period or any other combination of numbers and periods that you consider reasonable and that will not impact your ability to attract and keep tenants. The limit of 10 days within any 6-month period without “registration” is an often used limit.

The limits should not be unduly restrictive. For example, a judge would likely consider it such if tenants are required to “register” all overnight stays. However, keep in mind that you don’t have the right to restrict a tenant’s social life or pass judgment on the propriety of visitors’ stays.

You may want to include a clause within your lease that provides information regarding the need for and the procedures for changing a visitor to a co-tenant. This is generally advantageous, as it results in someone else to go after if there are unpaid rents and/or damages.

Lease agreements should also include clauses prohibiting or otherwise limiting assignment and/or subletting and/or roommates. If not completely prohibited, conditions of approval and explanation of the approval process should be included.

As with any lease clause, such clauses must not violate any state laws or local ordinances (it is possible some jurisdictions may disallow total prohibition against assignment/subletting and/or otherwise limit restrictions) and must be enforced fairly and equally among all tenants and not in any discriminatory manner that might provide cause for a fair housing law violation claim.

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Q2

I have a tenant that is in a month-to-month lease that I would like to terminate. I suspect he is not going to go easy, will likely stop paying rent upon notice, and could leave the property in damaged condition (holding 2 months security deposit that was given by a girlfriend who has left). Current lease stipulates that at least 60 days notice will be given in this situation. Do I need to worry about any fair housing issues.

A2

Detailed discussions of evictions and fair housing issues can be found in the Mini Training Guides and the eCourses. As examples, the Training Guides titled “9 Steps to Eviction” and “9 Steps to Avoiding Fair Housing Problems” cover those particular topics. Those subjects and many others are also covered in certain lessons of the various eCourses. Both topics are covered extensively in lessons of the “Income Property Basics” and “Managing Income Property” eCourses. The “Evictions” eCourse is dedicated to that particular subject.

The above being said, I will try to briefly discuss some of the issues in your posting. First, I must assume that there is some reason that you wish to terminate this tenancy. If you are getting the rent on time and he’s not causing any other significant problems, be sure that you consider the total costs of a vacancy. For a month-to-month tenancy the rent can be increased at any time upon appropriate notice – 30 days in most states, although some states require a longer notice period under certain conditions and any longer period specified by the lease agreement must be followed. Sometimes a significant rent increase will cause a problem tenant to depart.

In general, no reason need be given for termination at the end of a lease period – month-to-month in your case – and it is best to not provide a reason that might be turned into a fair housing claim due to the way the reason was worded or how the tenant interpreted the reason. One should usually not let fear of retribution prevent termination of the occupancy of a bad tenant, including one who doesn’t pay the rent in a timely manner. If he does purposeful damage, report the matter to the police as a crime.

For an existing bad tenant, retribution problems can sometimes be reduced by some simple steps. First, give notice immediately after the most recent rent check has cleared the bank rather than the required notice period before the due date. Most states allow the date of termination to be any day of the month as long as proper notice is given. Second, take immediate action if rent is not received as required. This means, for example, serving a “pay or quit” notice the day after the rent is due and not paid and then filing with the court to begin the eviction immediately after the notice period expires as allowed by law of the particular state.

The fact that his girlfriend paid the tenant’s deposit may or may not be an issue. If she was also on the lease you will need to be sure that an accounting for the security deposit be provided to both parties and that any possible refund be made via a check made payable to them jointly. Of course, the accounting/refund must be provided within the period required by your state’s law, because failure to do so can result in substantial penalties in some states, including treble damages and/or prohibiting deductions from security deposits, requiring the landlord to file a lawsuit to obtain any money.

Although, perhaps not directly helpful for the current problem, I will mention that a landlord can minimize the costs resulting from bad tenants. As for many potential problems, the first line of defense is to have adequately screened and properly selected the tenant in the first place. The next most important defense is to utilize good documentation, including an adequate lease agreement and good move-in/move-out procedures that include a good checklist.

Finally, if you are really worried that the termination “will not go easy” you should consider turning the matter over to a competent attorney from the initial notice to the eviction if necessary. There are numerous ways in which a knowledgeable tenant can delay the eviction when the landlord is not experienced in such matters and mistakes made by the landlord can result in needing to start over after weeks of effort, adding to both time and expense of evicting. The cost of a good attorney can sometimes be considerably less than the cost of delays in eviction.

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Q3

Do you have any resource on what you can and cannot ask during tenant screening and if it is permissible to make copies of tenant documentation? Also, can I give the applicant a copy of the report?

A3

You can ask for almost any documentation that might be of use in screening and you should make copies of anything that could ever 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 care about seeing tax returns of an applicant who provides W-2s. 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 tax returns to verify self-employment income and W-2s 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.

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

For applicants to whom you must provide an adverse action notice, FTC regulations require that when an adverse action is taken that is based solely or partly on information in a consumer report the FCRA requires the landlord to provide a notice of the adverse action to the consumer. 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.

However, 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 ($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 require 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.

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Additional Information

Most of the issues discussed in these Q&A’s are covered in considerably more detail in our eCourses and/or in our Mini Training Guides.

More Bedbug Issues

With the well publicized resurgence of bedbug infestations, landlords must take a more aggressive approach to suspected or known presence of bedbugs. In addition to habitability, health, and safety requirements as currently mandated by landlord-tenant laws, landlords in states with bedbug legislation must now incorporate specific additional policies for disclosure and mitigation of bedbug infestations.

Recently Arizona joined Illinois, Maine, and New York in taking initiative to enact comprehensive legislation to assign various duties and responsibilities for landlords, tenants, and pest control companies to prevent, manage, and control bedbug infestations. Several other states and certain local municipalities have similar bedbug legislation pending or have commissioned further study into the prevention and treatment of infestations.

For example, under the new Arizona law, a landlord has the followings obligations:

• To maintain the dwelling unit free of an infestation of bedbugs.
• To provide educational material to existing and new tenants. Educational material may include (1) a description of the measures that may be taken to prevent and control bedbug infestations, (2) general information about bedbugs including a description of appearance, (3) description of behaviors that are risk factors for attracting bedbugs (such as purchasing or using discarded mattresses, furniture, clothing, or traveling without taking proper precautions against transport of existing infestations, and (4) information as provided by federal, state, or local health agencies or housing agencies.
• To refrain from entering into a lease agreement with a tenant for a dwelling unit that the landlord knows to have a current bedbug infestation.
• To either personally or by landlord’s licensed pest control applicator visually inspect the dwelling unit for bedbugs within 7 business days after receiving written or electronic notice from the tenant of a possible bedbug infestation.
• To start the process of mitigation of bedbugs in the dwelling unit within 7 business days after finding evidence that a bedbug infestation exists in the dwelling.
• To use for mitigation a pest control applicator who is licensed pursuant to Arizona Statutes, Title 32, Chapter 22. In addition, unless the landlord is a licensed applicator, the landlord shall not use any pest control techniques that constitute mitigation.
• To provide the tenant with a written notice of the bedbug mitigation treatment protocol at least 3 business days before the initial treatment date. Notice will be deemed received by the tenant on the date the notice is personally delivered or mailed first class.
• To be responsible for the bedbug mitigation expenses for the dwelling unit and any surrounding units that are infested unless otherwise provided for.

Under Arizona law, a tenant has the following obligations in respect to a bedbug infestation:  

• To maintain the dwelling unit free of an infestation of bedbugs.
• To not move material that is infested with bedbugs into a dwelling unit.
• To provide the landlord written or electronic notification of the presence of bedbugs in the dwelling unit within 3 business days if the tenant knows of the presence of bedbugs. Providing notice to the landlord pursuant to this obligation constitutes the tenant’s permission to the landlord to enter the dwelling unit for the sole purpose of inspecting for or the mitigation of bedbugs.
• To allow the landlord and landlord’s licensed pest control applicator access to the dwelling unit after receiving notice from the landlord of a bedbug inspection or mitigation.
• To comply with the bedbug mitigation protocol as established by the licensed applicator. This may include pretreatment activities, temporary evacuation of the dwelling unit, post-treatment activities, and the obligation to report to the landlord within 3 business days of ineffective treatment or re-infestation.
• To not apply or permit any unlicensed person to apply any bedbug control techniques that constitute mitigation
• To provide written notice to the landlord of the tenant’s intention to correct conditions at the landlord’s expense if the landlord fails to inspect and if necessary mitigate a bedbug infestation within the prescribed timeframe. If the landlord fails to correct the condition within 10 business days after being notified by the tenant in writing, the tenant may cause the work to be done by a licensed pest control applicator, submit to the landlord an itemized statement for the pest control services and deduct from rent due the actual and reasonable costs of the pest control treatment. Such costs to not exceed five hundred dollars or one-half of the monthly rent whichever is greater.
• To be held financially responsible for bedbug mitigation expenses for the dwelling unit and surrounding units that are infested if the tenant fails to comply with any of the above obligations.

In addition, the new Arizona legislation provides that the landlord and tenant of a single-family residence may agree that the tenant is responsible for bedbug mitigation. A landlord is deemed to have successfully mitigated a bedbug infestation upon completion of bedbug treatment by a licensed pest control applicator. The new legislation does not limit the landlord’s or tenant’s rights and obligations and except as specifically provided, does not create a cause of action against (1) a landlord, landlord’s employees, officers, agents, and directors by a tenant or tenant’s guests for any damages caused by bedbugs and (2) a tenant by a landlord for any damages caused by bedbugs.

Mitigation process by a pest control applicator is defined as the attempt to eliminate or manage the infestation of bedbugs by poisoning, spraying, fumigating, trapping, or any other recognized and lawful pest control method, including repeated applications of any treatment particularly in areas where bedbugs are likely to congregate. Mitigation expenses as defined in the statute mean reasonable and necessary costs of pest control treatment and may include cleaning, removal and replacement of flooring if reasonably required by the degree of infestation. Infestation is defined as the presence of bedbugs is sufficient to materially affect the health and safety of tenants and tenants’ guests. Surrounding unit is a dwelling unit that shares a common wall with or is directly above or below another dwelling unit.

Landlords must have an adequate bedbug procedure established within their leases as a normal part of their rental policy. They should also budget for the potentially high cost of prevention and/or mitigation.

Landlords should require that the pest management company provide a detailed written description of the bedbug treatment program that they will follow, as this can provide additional legal protection. Also, landlords should keep detailed treatment records because disclosure of treatment history is required by law in some states and the records may be important in defense against lawsuits. Record keeping is also important because states are beginning to require disclose of past history upon sale of real property.

Even when the law does not require professional treatment of bedbug infestations, self-help treatments are rarely effective and not advisable, as they come with great risks, notably an increased probability of lawsuits. Unlike roaches, bedbugs do not ingest poison and die later. It is of no value to use a bug bomb or fogger. Since bedbugs can go as long as one year between feedings, a “wait and see” attitude to starve them out is not feasible.

While a landlord may successfully defend against litigation, the costs of doing so will no doubt be much higher than paying professionals to deal with the bedbug infestation in the first place. Immediately attacking the infestation utilizing professionals will go a long ways to a successful defense in court. Furthermore, an infestation in one unit will soon affect the whole building if left uncorrected. Ignoring the problem or attempting to deal with it yourself will only increase potential liability.

Until recently, although bedbugs can cost landlords and property management firms lost rent, battered reputations, and lawsuits – despite the fact that it is usually the tenants who bring the bed bugs into apartments and rental homes – one of the few consolations has been that bedbugs do not carry any known pathogens or diseases. However, very recent news has suggested that this is about to change, significantly further increasing the potential liability for landlords and management companies.

Doctors at the inner-city hospital in Vancouver, BC had noticed two things happening in their neighborhood— a boom in bedbugs and a boom in cases of MRSA, or methicillin-resistant Staphylococcus aureus, a bacterial infection highly resistant to some antibiotics. Dr. Marc Romney, a medical microbiologist at St. Paul’s Hospital/Providence Health Care, decided to see if the two were related.

Researchers took five bedbugs that patients had brought in and crushed and analyzed them. They found MRSA on three of them. On the other two they found VRE – vancomycin-resistant enterococcus faecium, a less dangerous form of antibiotic-resistant bacteria.

If left untreated, MRSA can cause pneumonia or infections of the skin, blood, and joints. The bacterium, once confined to hospitals, has been increasingly found in community settings like locker rooms and gyms, and kills 19,000 Americans each year. Recently, the FDA approved a quick diagnostic test that promises to help infected patients receive treatment more quickly.

Dr. Romney stated that it is not clear whether the bacteria (1) originated with the bedbugs or (2) the bugs picked them up from people who were already infected. Both are scenarios are often seen in hospitals. And experts have been far more worried about nurses and other health care workers spreading the bacteria than the bedbugs, Romney said, which is why the finding, although disturbing, is inconclusive.

Furthermore, it’s also not clear whether the bacteria existed on the bed bugs or in them. That is, were the bed bugs carrying MRSA on their backs or were the bacteria living and growing inside them? Either way, it’s not good news: if bed bugs are capable of carrying and transmitting MRSA the way a mosquito spreads malaria, it could mean a whole new vector of human disease.

Further studies are needed to characterize the association between S. aureus and bedbugs and it may turn out that the results of this small study do not really mean that there is additional risk related to bedbug infestations. However, in the meantime, since landlords potentially face increasing risk due to the possible danger of MRSA infections, the prudent landlord will be increasingly vigilant against infestations and take increased steps to deal with them when found.

In conclusion, whether to minimize existing risks of lawsuits, to obey existing and new state laws and local ordinances specific to the matter, or to reduce exposure to even greater potential liabilities if it turns out that bedbugs can in fact spread MRSA, landlords and property managers must take certain steps. They must educate themselves regarding existing legal requirement, keep informed regarding new requirements, and institute adequate procedures for prevention and eradication of infestations.

Additional Information

For additional discussions regarding a wide variety of real estate investing and management issues see our eCourses and our Mini Training Guides.

We provide here a few questions that have been posted in the Community Forums and our answers to them.

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Q1

What are my legal obligations concerning Bed Bugs? To my knowledge there are no bed bugs in any of my apartments at this moment, but I’ve been reading lately about them becoming a national problem. What if I get a call and my tenant says “there are bed bugs in my apartment?”

A1

Although not historically considered by medical science to be a health concern, bedbugs are considered to be a more serious issue compared to many other vermin because bedbugs (1) are parasites that like human blood, (2) inflict irritating bites on their victims (3) are persistent, resilient, and difficult to eradicate; and (4) readily move among units of a building.

There is a historical social stigma attached to these blood-sucking parasites. Many people mistakenly believe bedbugs are a sign of unclean living conditions. This stigma causes some hotels and landlords to ignore infestations or to attempt self-help treatment.

Adult bedbugs are small, approximately 3/16” in length, light brown to reddish-brown color, wingless, nocturnal insects that feed on the blood of warm-blooded animals. Seen from above, bedbugs appear to be oval in shape but are flattened from top to bottom allowing them to easily hide in a number of places, thus making it difficult to locate breeding sites. Although they prefer human blood, they will feed on other warm-blooded animals including pets, rodents, and birds if a human host is not available.

While bedbugs are most frequently found in sleeping areas (mattresses, box springs, bed frames, bed linens) they can also hide in other furniture, cracks in floors and walls, picture frames, TVs, telephones, and electrical outlets. They also travel between rooms, using electrical, plumbing, and ventilation “highways.” A particularly bad infestation of bedbugs will give off a musty or sweet odor, sometimes described as the smell of rotting coconuts.

Vacationers and travelers can inadvertently bring bedbugs back with them in their luggage or clothing. Bedbugs can survive travel in “trains, planes, and automobiles” as well other modes of transportation. Furniture can be another source of introducing bedbugs into a unit. Although pre-owned or thrift-store furniture is the most suspect, even newly purchased items should be carefully examined before being placed in the unit.

The use of chemical agents such as DDT had effectively brought bedbug populations under control in the United States during the 1950’s and, until recently, bedbugs were considered uncommon in industrialized countries. However, certain factors such as the U. S. Environmental Protection Agency ban on the use of DDT, the increase in international travel to countries and immigration from countries with bedbug populations, the world population growth, and the increasing mobility of U.S. society in general have produced a significant increase in bedbug populations.

The statutes of most states require that the landlord of a residential unit must maintain the unit in a “habitable” condition. In general, the unit must comply with state and local building and health codes that materially affect tenants’ health and safety. Federal (HUD) standards of habitability are relatively easy to meet and landlords should consider them as bare minimum standards rather than as sufficient to attract and retain good tenants. State and local habitability requirements, which are often more stringent, must be met in addition to the federal standards.

Even in states having no specific habitability statute, courts have held that all residential leases contain an “implied warranty of habitability.” In general, vermin are considered a habitability issue. Housing regulations in many jurisdictions explicitly require the landlord to keep the premises free from vermin.

The mere presence of bedbugs might subject a landlord to possible rent reductions at the very least and, in the worst-case scenario, might result in lawsuits for constructive eviction even though he/she has diligently attempted to eradicate the infestations and even if eventually successful in doing so. There is even the possibility of claims regarding damage to the health of tenants even though bedbugs are not medically considered to be a health concern. Accordingly, landlords who receive tenant claims of bedbug infestation should address those claims immediately.

Self-help treatments are rarely effective and not advisable, as they come with great risks, notably an increased probability of lawsuits. Unlike roaches, bedbugs do not ingest poison and die later. It is of no value to use a bug bomb or fogger. Since bedbugs can go as long as one year between feedings, a “wait and see” attitude to starve them out is not feasible.

Because of the difficulty of eradicating the creatures, professional treatment is highly recommended to confirm an infestation and develop an aggressive, integrated pest management plan. Professionals have more potent chemicals than are available to the public and can swiftly and effectively deal with the problem. The only sure way to kill bedbugs is to expose them to high temperatures. Professional exterminators usually utilize a combination of steam and pesticides. Multiple treatments may be required at scheduled intervals over several months and depending upon the circumstances can be costly.

While a landlord may successfully defend against litigation, the costs of doing so will no doubt be much higher than paying professionals to deal with the bedbug infestation in the first place. Immediately attacking the infestation utilizing professionals will go a long ways to a successful defense in court. Furthermore, an infestation in one unit will soon affect the whole building if left uncorrected. Ignoring the problem or attempting to deal with it yourself will only increase your potential liability.

Bedbugs have been called an “epidemic phenomenon” poised to become the pest of the 21st century. There are some recent indications that tenants may be less successful in litigating the bedbug issue in the future, but, again, for now landlords should take bedbug complaints seriously and do everything possible to solve infestation problems, utilizing professionals rather than depending on self-help treatments.

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Q2

What is the latest information on Companion and Service Animals?

A2

Although I could answer many possible questions that are specific to a particular issue, your question is too broad to answer in this forum. You are asking a general question about a subject that is not yet totally defined even though various laws related to the subject have been in force for many years. However, it is one that gets landlords into trouble with a number of different state and federal agencies, including the U.S. Department of Justice.

Not every agency or every court is on the same page regarding what defines a service animal vs. a companion animal and some jurisdictions have taken the position that there is no difference. Things are complicated further by the severe limitations on landlords regarding verifying the tenant’s need for an animal, another area where there appears to be disagreement among attorneys and among enforcement agencies. These factors, of course, require landlords to walk a thin line if they are unwilling to allow all animals in order to avoid the problem entirely.

I will mention that the effect on landlords of the ADA Amendments Act of 2008 appears to be minimal. However, full interpretation of the Amendment will likely require additional years of adjudication.

Feel free to post again with a more specific question regarding a particular issue.

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Q3

I have a tenant who moved out without giving written notice. The lease stated that they were to give 60 days written notice. I am looking for language to use in a letter to them.

A3

You do not indicate the state where the property is located nor whether the lease is month-to-month or for a longer term. Some states or local governments do not allow more than 30 days notice for termination of a month-to-month and some may not allow requirement for notice of termination at the end of a longer lease term. 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 and (2) the relevant lease clause is unambiguous, you could simple say:

“The lease agreement requires that 60 days notice be given for termination of your lease. Failure to provide such notice makes you liable for 60 days of additional rent from the date you terminated your occupancy.”

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 that paid days.

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Additional Information

Most of the issues discussed in these Q&A’s are covered in considerably more detail in our eCourses and/or in our Mini Training Guides.