Experiences as Landlords? Any Big Fat Hairy Legal Issues I need to worry about?

In My Humble Opinion
1

I am trying to purchase a house sometime in the next few months. Given the area, even with the reductions in prices recently, I figure that I will most likely have to rent some portion of this new house to help make ends meet. At the moment, there is no one else who would be a landlord with me (IOW no GF / wife). I am handy enough with power tools, so I am not concerned with the maintaining of the house. (I’ve been known to make furniture as a hobby; Norm’s got nothing to worry from me, but Ikea does.) What I am worried about is stuff like what if the renter(s) is a(are) deadbeat(s), what kinds of things could I be liable for, etc, etc.

FTR: I am in Massachusetts (and that’s where I am looking to buy). I’ve started poking around on http://www.lawlib.state.ma.us/landlord.html

Anyone have experience in this arena? Even in other states?

2

I’ve worked in rental property management for a long time. The main points:

Get a written lease. Spell out who is going to be living there. Spell out that the rent has to be paid by the 5th or there will be a late fee, and after the 10th eviction proceedings will be started. Tell the tenant that if they can’t pay the rent on time, they are to call you and let you know why and when it will be paid.

Check references. Check the phone book to make sure you are talking with the real former landlord and not some friend with a cell phone. You can also see if the local police department is aware of the person. We have a good relationship with them and they always let us know if they know this person.

Get at least 1 1/2 months’ security. If the prospective tenant can’t pay the security, how are they going to pay the rent.

Your lease should state: Any illegal activity is cause for immediate eviction.

3

Obviously states vary considerably. Some states’ legal systems favor landlords, others, tenants. It would be a good idea to get a book about the subject, and a recent one. I was warned not to trust any book more than 2 years old once; I ignored the advice, referred to an obsolete book and was very sorry afterwards.

There is (or was, I’m not current on California law) and quirk in California law that resulted from Arrieta v. Mahon, 1982 where the court said that in order to evict an adult who is not named in the lease, that person must be named in an Unlawful Detainer action and properly served.

Makes sense – protecting the rights of an innocent tenant – except it gives a crooked tenant a way to avoid eviction forever. Let’s say you name and serve the tenants who are on the lease, or if no lease, all the tenants you know about. The tenants get one of their friends to claim that he/she is living there, too. Once that reaches the court, the court throws out all the actions the landlord has taken (because not all parties were named and notified) and he must start from scratch. If the landlord now names and serves the friend (hard to do if the friend doesn’t really live there and gives no other address), then the tenant can find another “friend” and do it again. Only when every adult in the world has been used will this scheme come to a halt.

I was clued in on how to avoid this perpetual motion machine by a court clerk, who gave me some suggested wording for an Unlawful Detainer, something like (I’m paraphrasing) “John Doe and all other unnamed defendants”, which means the tenants can’t “do an Arrietta” anymore.

Don’t be outwitted by your opponents, or it will cost you.

As always, IANAL.

4

I disagree with a provision that essentially prevents you from filing an eviction action until the 10th. I don’t know the laws in your state, but in California, you want to have the right to give a 3-day notice to pay or quit on the 2nd day, which gives you the right to file an eviction action on the 6th.

So, I would just say rent is due on the 1st and after that it is late, but late fees will be incurred if rent is not paid on the 5th.

Spell out who will pay each utility, trash, etc.

Any late fees or unpaid utilities are deemed “additional rent.”

All amounts paid will be applied first to any unpaid security deposit, then to any past-due balance, then to current rent due.

Any acceptance of payment from the landlord shall not operate as a waiver of any breach of the lease by the tenant.

Tenant shall be responsible for damage to the premises caused by tenant or tenant’s guests.

Make sure you have enough money stashed away to pay the mortgage and premises maintenance for several months in case your tenant stops paying but won’t move out willingly and is able to stall an eviction action.

Never let a tenant stall your eviction action for more than a few days with appeals to sympathy, a sob story, or empty promises.

Never lock a tenant out or cut off their utilities.

Take care of maintenance issues asap. Do not rely on the tenant to be there when you need to make investigation of the premises or repairs. Do the investigation or repairs anyway by giving proper notice of entry.

If a tenant makes a claim that there is a habitability problem, get a camera and post a notice of entry asap to document the alleged problem and so you can make a repair estimate.

Make sure each tenant is fully individually responsible for the entire rent.

Avoid verbal agreements. Get it in writing.

Get your hands on a good rental agreement. Try the law library.

In fact, get a landlord-tenant guide from your local law library and give it a good once-over. Understand what topics it covers in general terms and read through the parts that interest you. Take notes, photocopy pages. That way, if you ever encounter a problem, you know exactly where to look to brush up on the law.

5

Here’s a lesson I had to learn the hard way a few times - be an asshole at the beginning so you aren’t forced to be an asshole at the end. That’s basically the one sentence version, and the general theory, for what **Annie-Xmas ** and Bearflag70 said. I’m not saying to be an asshole to the renter, just be that asshole who wants *everything * in writing, all of your i’s dotted and all of your t’s crossed. (Although, it doesn’t hurt to be a little stern in the first year or two, you can be freindly after that if they’ve never been late).

6

There is a judicial form to handle that problem…

http://www.courtinfo.ca.gov/forms/fillable/cp105.pdf

7

Once you do start eviction proceedings, do not cancel them if the tenant only promises to pay the rent. When you go to court tell the judge “I want the money now.” If the judge gives the tenant a week, file eviction papers if the rent is not paid in full in a week.

ETA: Put in your lease that your tenant must have tenant’s insurance to cover any personal possessions. During a recent flood, that provision saved us a lot of time and money when tenants demanded restitution for their possessions that had been stored in the basement and were damaged by the flood.

8

It can be cheaper to pay a tenant to move than to evict.

9

Do most juristictions in the US make a distinction between a “rental suite”, i.e. a house or apartment that is being rented out, and a “boarding house” which is the homeowner renting out a portion of his own home?

I know around here most of the landloard/tenant act doesn’t apply when the owner of the property is renting out his primary residence.

10

We charge an application fee, which if the prospective tenant passes, will be applied to their deposit. It covers what we have to pay to run a background check (which is WELL worth the money) and allows us to screen out the losers who can’t afford to pay $50.

I agree with the part about the first month’s rent as deposit. If they can’t come up with that amount plus the rent, you don’t want them renting from you. The tenant we had to evict bounced his deposit check to us, but we’d allowed them to start moving in, and he made it good within a day or two, claiming a mix-up with his payroll department. It only got worse from there…they lied about having a dog on the premises, which was a violation of their lease.

Lesson learned…bouncy checks, no key.

We’re pretty hard core about screening tenants…if we make an appointment to show the property, and you’re not there within 30 minutes, we leave. Also…check their car. How neat they keep their car can be an indication of how well they will keep the property clean.

And also, don’t discriminate on the basis of race, sex, religion, etc.

11

Good point on the lodger issue Throatwarbler Mangrove. I skipped over the fact that you will be renting a room in your own house. If that is true, then here is an idea you might want to think about…

You might consider making a written agreement where the person has a LICENSE to use your property as a single LODGER but has NO RIGHT TO EXCLUSIVE POSSESSION OF ANY PART OF THE PROPERTY (i.e., NOT A TENANT). Notably, California law distingushes between a single lodger and multiple lodgers. Your state might make that disctiction too.

This means the lodger has NO exclusive use of the bedroom, bathroom, or anything else… no locks on the bedroom door, etc. You have the right to use and enter any room and either party may terminate the license according to law.

Otherwise, the license terminates automatically at the end of each week / fortnight / month and must be renewed in writing at the expiration of the term. So, you could have a license agreement with a signature line for each period showing that the parties agreed to renew the license each period when the license fee was paid.

In California, it appears a lodger is entitled to notice of cancellation equal to the term of the license, so you might want to keep the license term pretty short. (e.g., 1 week license = 1 week notice of termination). However, this might get cumbersome if you have to bust out documents and exchange money every week. Maybe start with a one week term then expand the license term as you gain trust in the lodger.

If the lodger is found on the property when no license is in effect, then the person is a trespasser. Keep a copy of the license agreement handy to show the cops the lodger is not a tenant.

Make some arrangement whereby you will make reasonable efforts to give the lodger their personal property during normal business hours if the license is terminated and personal property is left behind. Otherwise, you will store their stuff for a bit then dispose of it yourself. The lodger will be responsible for storage costs.

Get a property damage deposit and make arrangements for a refund upon termination.

California lodger statute…

Check your local laws regarding lodgers and tenants. None of this may apply to you.

12

Thanks all. I now have a library card to the Mass Law Libraries. (Could be useful for other stuff, too. I’m an officer for my local teachers association.)

To clarify: In an ideal world, I will find a house that is already divided and rent out half, while I live in the other half.* I would like to find a house that I could afford on my own, but would not be able to make upgrades, have much of a budget, etc. That way rent is something I can truly reinvest in the house, either in helping pay down the mortgage quicker and/or upgrade / repair / etc. I would rent out a room to a friend, but I have done the random “flatmates” thing before, and have no desire to do that again. Sometimes I was fantastically lucky (and still hang out with those guys), sometimes I was not so lucky.

*Heck, I’d live in the part that needs work done while I rent out the nicer side.

13

Start watching Judge Judy for all the “what not to do.” :slight_smile:

Actually, most of what goes on in her courtroom would have been avoided with the advice in this thread (get it in writing, spell it all out, your tenants are not your friends, etc.)

14

My BOL did this…and he regrets it to this day: SCREEN your tenants carefully. DO NOT take a “section 8” (state subsidized tenant); they have rights BEYOND your rights. if the bathroom isn’t functiuonal (they will break a faucet or basin), they can withold rent till you repair it.
And, I second the word on evictions; it costs a fortune, you have to hire a lawyer, and you do not get any rent while the proceedings are on.
OH, and DO NOT rent to college students-my SIL did, and her tenants did $6000 woth of damage to her house! :smiley:

15

No pets–or be prepared to face 3 inch deep layers of crap on your floors.

16

Section 8 nightmare (form memory)…

The S8 inspector came by and did an inspection. Some things were not right and the inspector ordered the tenant to fix some things and the landlord to fix other things.

The landlord went to go fix those things but the tenant refused landlord entry.

The S8 inspector came back and saw the landlord things were not fixed, if I recall.

Lenaldord tried to go back to fix it, but tenant still refused to let landlord in.

Inspector came back and tenant refused entry for the S8 inspector. The inspector could not verify the landlord had fixed the things, so S8 pulled the rent subsidy, in theory… to punish the tenant and landlord, which was about 90% of the full rent. The S8 tenant also stopped paying the 10% share as well.

S8 sent notices to the property regarding cancellation of the S8 benefit. Tenant threw them out and landlord never got them.

So, landlord must pay mortgage, has no rent, thanks to tenant, and cannot evict except under more stringent S8 rules. Tenant has a potential defense on the face of it that landlord cannot evict tenant because landlord failed to fix the things the S8 inspector told landlord to fix.

Landlord is left to argue that the reason it didn’t get fixed was because the tenant refused landlord entry. Of course, tenant will deny that.

Now, landlord gets no rent and is potentially screwed under S8 rules.

17

Become suffiencent in home repair.

Be prepared to retrieve a flushed Barbie Doll head out of the U bend at 3am.
That is all the advice a friend of ours told us when we were looking into renting out homes. ( Didn’t do it because the homes were in Flint, which is a cesspool.)

18

Section 8 is the landlord’s worst nightmare. We have been trying to evict a Section 8 tenant who is a relative of one of my co-workers. The guy is not paying his portion of the rent. Plain & Simple.

First time in court he says he will pay the rent.
Second time in court he has a Legal Aid attorney argue that, while we are the managing company, the building is owned by an individual who is not being represented at the trial and whose name was not on the court papers.
Third time in court the owner is there, the tenant is not. Default judgement. The tenant goes back to Legal Aid, who argues that the second case was not settled, so the third case is invalid.
Fourth time in court–The judge gives the tenant one week to pay or get out.
Fifth time in court–The tenant argues he has no place to go with his two minor children and he will lose his Section 8 is he is evicted.

All this is bullshit to cover the simple fact that he owes three months’ worth of rental payments.

19

Section 8 (or any other state subsidy) sounds like one huge hassle. What are Landlord rights to refuse renters with section 8? If I run credit / background checks (which, btw, in MA I cannot charge the renter), will things like that show?

Anyone who is / has been a landlord: did you have a lawyer go over your agreement before you used it?

20

To be fair, in MA any tenant can withhold rent until you fix a toilet, not just section-8 tenants, even if they broke it. It’s one of the “Conditions That May Endanger or Materially Impair Your Health or Safety” and must be fixed within 24 hours of your tenant or the board of health notifying you, or the tenant may legally withhold rent. Sinks are a “fix within 5 days” problem, no matter who broke it. I agree that section-8 tenants may have a bit of an advantage, though, with the state watching over their investment and enforcing your legal responsibility as the landlord to repair any of the violations of the sanitary code. I can’t imagine basically having the state of Massachusetts as one of my tenants! :eek:

The book Legal Tactics , which is linked to from the lawlib site in the OP, is invaluable when it comes to knowing your rights and responsibilities as a landlord in MA, and knowing what your tenant can do to screw you over if they really want to and know the law. MA law favors tenants, so do everything right to cover yourself.

I’ve only been a tenant in MA, and after reading “Legal Tactics” I’d never be a landlord. I believe that most tenants are probably just fine, but I would dread getting one of the bad ones.