Category Archives: Real Estate Know-Hows

California Rental Laws

August 22, 2016 nit Leave a comment

This article summarizes some key California rental laws applicable to residential rental units.

We’ve used the Official State Statutes and other online sources cited below to research this information and it should be a good starting point in learning about the law.

With that said, our summary is not intended to be exhaustive or a substitute for qualified legal advice. Laws and statutes are always subject to change, and may even vary from county to county or city to city.

You are responsible for performing your own research and complying with all laws applicable to your unique situation.

If you have legal questions or concerns, we recommend consulting with the appropriate government agencies and/or a qualified lawyer in your area. Your local or state bar association may have a referral service that can help you find a lawyer with experience in landlord-tenant law.

Official Rules and Regulations

Cal. Civ Code §§ 1925 – 1954 – Title 5: Hiring of Real Property (scroll down)
Cal. Civ Code §§ 1961 – 1962.7 – Title 5: Chapter 4: Identification of Property Owners (Scroll Down)
Cal. Code of Civil Procedure – Table of Contents
California Health and Safety Code – Table of Contents
California Department of Consumer Affairs – Landlord Tenant Rules
A Guide to Residential Tenants’ and Landlords’ Rights and Responsibilities (PDF)

Details:

Security Deposit:

Security Deposit Maximum: Two months’ rent for unfurnished dwellings; 3 months’ rent if furnished dwellings. (Civ. Code §§ 1950.5 and 1940.5g)
Security Deposit Interest: No state-wide statute, but 15 (or so) localities have rent control ordinances that require you to pay interest, including Los Angeles. (reference)
Separate Security Deposit Bank Account: No Statute
Pet Deposits and Additional Non-Refundable Fees: Not Allowed (Civ. Code §§ 1950.5m)
Deadline for Returning Security Deposit: 21 days (Civ. Code §§ 1950.5g)
Security Deposit can be Withheld: (handbook)
- For unpaid rent;
- For cleaning the rental unit when the tenant moves out, but only to make the unit as clean as it was when the tenant first moved in;
- For repair of damages, other than normal wear and tear, caused by the tenant or the tenant’s guests; and
- If the lease or rental agreement allows it, for the cost of restoring or replacing furniture, furnishings, or other items of personal property (including keys), other than because of normal wear and tear.
Require Written Description/Itemized List of Damages and Charges: Yes. Receipts and documentation not needed to accompany the itemized list of repairs if repairs and cleaning cost less than $126. (Civ. Code §§ 1950.5g 4A)
Record Keeping of Deposit Withholdings: No Statute
Failure to Comply: A bad faith claim or retention by a landlord may subject the landlord to statutory damages of up to twice the amount of the security, in addition to actual damages. (Civ. Code §§ 1950.5(l))

Lease, Rent & Fees:

Rent is Due: Unless there is a contract to the contrary, and the lease is for less than one year, rent is due at the end of the month. Most leases state that rent is due at the beginning of the month. (Civ. Code §§ 1947) and (Civ. Code §§ 1962)
Payment Methods: Landlord must allow at least one form of payment that is neither cash nor electronic funds transfer, unless tenant has had an insuffienct funds payment, or stopped payment on a money order. Then the landlord can require payments to be paid in cash. (Civ. Code §§ 1947.3(1-2))
Rent Increase Notice: 30 days if rent increase is less than 10 percent of the lowest amount of rent charged during the last 12 months. 60 days if rent increase is more than 10 percent of the lowest amount of rent charged during the last 12 months. (Civ. Code §§ 827(b)(2-3))
Late Fees: Allowed, but they must be “reasonable” and obey rent control laws, and are only enforceable if specified in the lease. (handbook)
Application Fees: The maximum fee is adjusted each year based on changes in the Consumer Price Index since January 1, 1998. In 2012, the maximum allowable fee is $44.51 (Civ. Code §§ 1950.6(b)). Use Cozy to avoid charging application fees because the tenant pays for the credit report directly.
Prepaid Rent: Landlord is allowed to collect one month’s pre-paid rent (first month’s rent) plus two or three months’ security deposit. (handbook)
Returned Check Fees: Equal to the actual bank fee. Or landlord can charge a flat “service” fee which is $25 for the first occurrence, and $35 for each occurrence thereafter (handbook). I recommend using Cozy to collect rent online to nearly eradicate late payments.
Tenant Allowed to Withhold Rent for Failure to Provide Essential Services (Water, Heat, etc.): Yes, because the property is under the “implied warranty of habitability.” (handbook)
Tenant Allowed to Repair and Deduct Rent: Yes, but not more than the cost of one month’s rent, and tenant cannot use this remedy more than twice in a 12-month period. (Civ. Code §§ 1942)
Landlord Allowed to Recover Court and Attorney’s Fees: Yes (Civ. Code §§ 789.3d)
Landlord Must Make a Reasonable Attempt to Mitigate Damages to Lessee, including an Attempt to Rerent: Yes (Civ. Code §§ 1951.2)

Notices and Entry:

Notice to Terminate Tenancy – Fixed End Date in Lease: No notice is needed as the lease simply expires. I recommend giving 60 days notice anyway.
Notice to Terminate Any Periodic Lease of a Year or More – If ALL tenants have lived there longer than a year, the landlord is required to give 60 days notice. (handbook)
Notice to Terminate a Periodic Lease – Month-to-Month: Landlord is required to give 30 days notice. Tenant is required to give 30 days notice. (Civ. Code §§ 1946)
Notice to Terminate a Periodic Lease – Week-to-week: Landlord is required to give 30 days notice. Tenant is required to give seven days notice. (handbook)
Notice to Terminate Lease due to Sale of Property: For periodic tenancies only (example: month-to-month), 30 days notice if ALL of the following are true: (Civ. Code §§ 1946.1) (handbook)
1. The landlord has contracted to sell the rental unit to another person who intends to occupy it for at least a year after the tenancy ends.
2. The landlord must have opened escrow with a licensed escrow agent or real estate broker, and
3. The landlord must have given 30-day notice no later than 120 days after opening escrow, and
4. The landlord must not previously have given you a 30-day or 60-day notice, and
5. The rental unit must be one that can be sold separately from any other dwelling unit. (For example, a house or a condominium can be sold separately from another dwelling unit.)
Note: A landlord can only end a periodic tenancy when a property or unit is sold, and not a fixed-term tenancy that has not yet expired.
Notice of date/time of Move-Out Inspection: 48 hours (Civ. Code §§ 1950.5(f))
Eviction Notice for Nonpayment: Three days (Civ. Procedure Code §§ 1161(2))
Eviction Notice for Lease Violation: Three days to remedy lease violation or landlord can file eviction (Civ. Procedure Code §§ 1161(3)). Landlord can also terminate the lease for subletting without permission or illegal activity on the premise. (Civ. Procedure Code §§ 1161(4))
Required Notice before Entry: 24 hours (Civ. Code §§ 1954a)
Entry Allowed with Notice for Maintenance and Repairs (non-emergency): 24 hours (Civ. Code §§ 1954a)
Emergency Entry Allowed without Notice: Yes (Civ. Code §§ 1954b)
Entry Allowed During Tenant’s Extended Absence: No (Civ. Code §§ 1954)
Notice to Tenants for Pesticide Use: No Statute
Lockouts Allowed: No (Civ. Code §§ 789.3b(1))
Utility Shut-offs Allowed: No (Civ. Code §§ 789.3a)

Disclosures and Miscellaneous Notes:

Landlord Must Accept First Qualified Applicant – The 2012 Fair Housing Handbook of California says on page 24, “The landlord should take the time to check out the information and make a selection based on the first qualified applicant(s),” although there is no statute to support this. It’s recommended but not law.
Copy of Lease: Provide a copy of the rental agreement or lease to the tenant within 15 days of its execution by the tenant. (Civ. Code §§ 1962(4))
Utilities: Landlord must disclose if utilities that service tenant’s unit also service other areas (such as common foyers), and disclose the manner in which costs will be fairly divided up. (Civ. Code §§ 1940.9) Landlord must also provide a formula for dividing up utilities when utilities are split among multiple tenants.
San Francisco Utilities: Landlords must provide heat that can maintain a room temperature of 68 degrees. This level of heat must be provided for at least 13 hours, specifically from 5-11 AM and 3-10 PM.
Move-In Condition: Landlord is not required to provide a Move-In Condition Checklist for the Tenants to complete. However, it is recommended and extremely helpful should you ever go to court over physical damages to the dwelling.
Mold: Landlord must disclose, prior to lease signing, knowledge of any mold in the dwelling that exceeds safety limits or poses a health concern. Landlord must distribute a State Department of Health Services consumer handbook once it is developed and approved. (Health & Safety Code §§ 26147 and Civ. Code §§ 1941.7)
Demolishment: If a landlord or agent has applied for a permit to demolish a rental unit, the landlord must provide written notice to prospective tenants before accepting any money. (Civ. Code §§ 1940.6)
Ordnances: Landlord must disclose the locations of former ordnances (weapons and artillery)in the neighborhood. (Civ. Code §§ 1940.7)
Sexual Offenders: Landlords are required to include the following language in the lease:
“Notice: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at www.meganslaw.ca.gov. Depending on an offender’s criminal history, this information will include either the address at which the offender resides or the community of residence and zip code in which he or she resides.” (Civ. Code §§ 2079.10a)
Pests Disclosures: At lease signing, Landlord must disclose any pests control contracts or disclosures received by pest control companies. If the premise is being treated for pests, landlord must disclose the pesticides used and their active ingredients, and any warnings associated with them. (Civ. Code §§ 1940.8, and Business and Professional Code §§ 8538)
Smoking: If the landlord limits or prohibits smoking, landlord must include a clause that specifies the areas on or in the premise where smoking is prohibited. (Civ. Code §§ 1947.5)
Proof of Domestic Violence Status: Landlord is entitled to proof/documentation of domestic violence status of the tenant if the tenant claims they are a victim. (Civ. Code §§ 1941.5, 1941.6, 1941.7)
Locks: Landlords must change the locks if requested by a domestic violence victim and proof of court order is given. (Civ. Code §§ 1941.5 and 1941.6)
Special Treatment: A victim may terminate a lease with 14 days notice and proof of victim status. (Civ. Code §§ 1946.7(d)) A landlord cannot end or refuse to renew a tenancy based upon the fact that tenant or a member of tenant’s household is a victim of a documented act of domestic violence, sexual assault, or stalking. (Civ. Procedure Code §§ 1161.3)
Abandoned Property: The rules are lengthy and specific, please read Civ. Code §§ 1965, 1980 to 1991.
Retaliation: Landlord must not terminate a lease, increase rent, decrease services, cause a lessee to quit involuntarily, or bring an action to recover possession to a tenant who has filed an official complaint to a Government Authority, been involved in a tenant’s organization, or exercised a legal right. Courts will assume “retaliation” by landlord if negative action is taken on the tenant within 180 days (six months) after any of the prior tenant actions. (Civ. Code §§ 1942.5) It will also be considered retaliation if the landlord acts negatively within six months after any of the following:
- Using the repair and deduct remedy, or telling the landlord that the tenant will use the repair and deduct remedy.
- Complaining about the condition of the rental unit to the landlord, or to an appropriate public agency after giving the landlord notice.
- Filing a lawsuit or beginning arbitration based on the condition of the rental unit.
- Causing an appropriate public agency to inspect the rental unit or to issue a citation to the landlord.

Court Related:

Small Claims Court Limits: $10,000, however landlord may not file a suit for over $2,500 more than twice a year. (Civ. Procedure Code §§ 116.110 to 116.950)
Eviction Cases Allowed: No (handbook)
Small Claims Court Limits – Los Angeles: $10,000
Small Claims Court Limits – San Diego: $10,000 (How to File a Small Claims Case booklet)
Small Claims Court Limits – Orange County: $10,000
California Courts – Judicial Branch – Small Claims
The Small Claims Court – A Guide to its Practical Use (PDF)

Business Licenses:

Business License required: No state-wide statute, but local cities and counties may have regulations and requirements. Check with your local governing authority.

Credit to Lucas Hall

Lucas is the Chief Landlordologist at Cozy. He has been a successful landlord for over 10 years, with dozens of happy tenants and a profitable income property portfolio.

homes for rent, homes for sale,
newstarrealty.com

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Real Estate Know-Hows

5 Attorney-Sanctioned Business Practices

August 17, 2016 nit Leave a comment

Protect yourself and polish your reputation by knowing how to present information—and when refer a client to someone else for assistance.

judge_1

Don’t position yourself as the primary source of information.

Your role as a real estate professional is to do what it takes to arrange and close deals—but that doesn’t mean you need to be the authoritative source for answers to every question that might come up. When a buyer asks questions such as how many finished square feet a home has, if it’s in a flood plain, what the school boundaries are, or when a new light rail line might open—in other words, anything you don’t know as a fact on your own—be sure to clearly provide the source of any information you provide in response, says Michael Baucum, a transactional real estate attorney in San Antonio, Texas.

So instead of just casting what you say as a fact, say, “According to,” or, “The appraisal document says,” or something similar, Baucum says. Those few extra words could help protect you if someone is unhappy later on with something you told them.

Be upfront about whom you’re working for.

Be sure to explain that your duty is to the seller before discussing a property with people who stop by an open house or contact you based on a sign or advertisement, advises Mike Hege, broker-in-charge at Pridemore Properties in Charlotte, N.C. Doing so could help prospective buyers avoid inadvertently breaching an agreement they may have with a buyer’s agent—and it could help prevent you from unwittingly entering a dual agency situation, too. Your best bet is to advise people who express interest in your listings to use their own agent, Hege says.

Never give tax advice.

Buyers and sellers might ply you with questions about the tax benefits and implications that relate to a home transaction, but your answer should always be the same: “Consult a tax professional,” says Jim Downing, a sales associate with Berkshire Hathaway HomeServices Florida Properties Group in Clearwater, Fla. Even basic questions with what seem like obvious answers, such as whether mortgage interest is tax-deductible, could invite trouble, because no two people’s financial situations are identical.

Don’t interpret HOA rules or budgets for clients.

Your client has just decided to buy a condo and now has to dig through a thick stack of paper relating to the rules and finances of the building they want to move into. Explaining what the documents mean and helping your client decide if they’re acceptable might seem like an obvious way to demonstrate your value—but this is work best left to an attorney, Downing advises.

Keep a record of what you say.

Just as having a log of how many miles you drive and where you go can help you at tax time, maintaining an accurate record of what you discuss with clients can prove very useful if you have to recall what you said in the future. Mindful of the fact that he might need to reconstruct the details of a conversation long after it occurs, John Shipman, director of green operations for Coldwell Banker George Realty in Arcadia, Calif., makes a habit of writing down what he says in meetings, along with the date and time. “I’ve always been told by attorneys that if I said something but it’s not written down, it never happened,” Shipman says.

Credit to Sam Silverstein

As a writer-producer for the National Association of REALTORS® based in Washington, Sam Silverstein develops articles and videos for NAR’s members and others interested in its activities, statistics and research.

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Real Estate Know-Hows

Who is Responsible for Cleaning Dirty Carpets?

August 15, 2016 nit Leave a comment

Swatches_of_carpet_1

Is that chocolate ice cream, or something the previous tenant’s baby left behind? Ah yes, the joys of renting a unit with carpet.

While landlords are responsible for ensuring that their rental units are safe and inhabitable, it’s difficult to argue that a dirty carpet is dangerous or makes a house unlivable.

But what exactly is meant by a “unlivable“, and how do cleaning carpet stains fit in?

Aren’t carpet stains considered “normal wear and tear”?

If you, as a renter, are confused about your rights, you’re not alone. This is a common problem, and one that can cause to you live in less than ideal living conditions. Livable conditions typically refer to necessities, such as having a roof over your head, hot water, and heat during the winter.

But you might, for example, be asked to live with a drip in the bathroom or an unsightly stain in the carpet.

Although those problems are pretty minor and are unlikely to be a reason for you to leave your rental property, those irritants can make a living situation unpleasant.

Who Made it Dirty?

Did you, the renter, spill red wine, or drop your spaghetti dinner onto the carpet? If so, then you’ll likely be responsible to fix/clean it.

Even though most of America eats dinner in front of their TV, food spills are never “normal wear and tear”. That’s why we have dining rooms, and if you choose to each on the couch, you do so at your own risk.

…though common, food spills are never “normal wear”

Was the stain there when you moved-in? If so, then the landlord certainly can’t hold you responsible for it – but he also might not have to clean it.

Be sure to document the condition of the property, including the stain, when you move in so there are no issues later. And while it might be unsightly, the landlord still doesn’t have to fix it unless it’s causing a health issue.

Here’s a related podcast episode:

Lucas Hall

How Much Can a Landlord Charge for Carpet Damage? How Much Can a Landlord Charge for Carpet Damage?

Janitor Cleaner Vacuum Carpet Cleaning Shield

Know the Laws for Cleaning, Maintenance, and Repairs

A stain in the carpet, or generally dirty carpets, do not make a rental unit uninhabitable (obviously); therefore, the rules surrounding whether a landlord has to clean a carpet can seem hazy.

Cosmetic repairs are usually not legally required. But in some cases, such as issues with mold or health risks, landlords may have to make such repairs.

If the carpet stain or condition is a threat to human safety, then the landlord should intervene.

To help you determine whether your landlord is legally required to clean or repair your carpet, you could do some research to see if this is addressed in the following:

County building codes
State tenant-landlord laws
Written or oral promises that your landlord has made
Terms of your lease

If you find out that your landlord is legally required to clean the carpet every X years, or deal with the unsightly carpet stain, then the next hurdle is to actually get your landlord to do it.

Although withholding your rent or using a “repair and deduct” procedure might be allowed by law in some states, it is not advisable to do either because these methods can result in eviction.

Instead, why not try out an alternative to get your landlord to clean your carpet (or make other minor repairs)?

Here are four ideas to get your carpet clean:

1. Speak with Your Landlord

Ask your landlord about cleaning the carpet or doing another minor repair job. Your landlord might be very willing to fix the problem, especially if it prolongs the life of the carpet.

Plus, it shows that you take pride in the condition of the unit and your landlord will likely want to make things better for you.

2. Write a Repair Request

Even if you have spoken with your landlord, writing a letter or an email can be helpful.

It gives the landlord time to think over the request. Additionally, a repair request gives you the opportunity to describe the problem and to explain why it is in the landlord’s best interest to clean the stain in the carpet.

Let them know that the stain may become worse and thus more costly to clean later.

3. Propose Mediation

If you can’t get your landlord to cooperate, you can propose a formal mediation.

This is probably one of the last resorts that you should consider with regards to cleaning carpet stains. But in some cases, contacting a mediation service can be the only way forward, especially if oral and written requests are ignored.

Mediators work with both you and your landlord to come up with a solution that you both agree is fair.

With that said, if your landlord is a slumlord, they will just ignore your request and act like you are crazy.

4. Clean Carpet Stains Yourself

If the landlord is not required by law to clean the carpet stain (which is common), and they are not willing to do so, you could try to clean the carpet stain yourself.

There are many methods to clean carpet stains; one of the most effective is by using a combination of vinegar and baking soda.

Soak the carpet stain with vinegar.
Sprinkle a little baking soda over the vinegar.
Pour vinegar on the pile of baking soda (expect a carpet volcano).
Wait until it absorbs the stain (approximately 5 minutes).
Wipe up the mixture, and vacuum.

This method should remove most carpet stains, so it is well worth a try, especially if your landlord is likely to withhold your security deposit if such stains are evident.

Credit to Jimmy Moncrief

Jimmy is a multifamily real estate investor and bank credit officer. He has written a complimentary bank negotiating guide on how to get around the 80% LTV rule.

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Real Estate Know-Hows

6 Home Improvement Flubs That Cause Inspection Headaches

August 11, 2016 nit Leave a comment

homeinspection

Do-it-yourself household projects have become increasingly popular, but home inspectors are finding a host of safety problems caused by overconfident home owners seeking shortcuts. “Home owners now see these DIY TV shows, which make these household remodeling projects look easy. They can go to a big box store and easily get the materials too,” says Randy Sipe, president of the American Society of Home Inspectors in Spring Hill, Kansas. “They think: ‘How hard can it be?’” Howard Pegelow, a home inspector in Arizona and Wisconsin, says home safety is a top priority in his inspections. He looks for loose carpeting, uneven steps, and water temperature extremes, among other common risk factors. Here are additional concerns noted by Pegelow, Sipe, and others in the field:

Wobbly decks

Look for: insecurely attached railings and wobbling or improperly sized posts.

“Decks shouldn’t move,” says Scott Patterson, an inspector with Trace Inspections in the Nashville area. Wood decks can collapse if they’re not properly attached to the house or if they rely on the house too much for support. “Fasteners can corrode, which could result in failure of the deck. Many times owners are unaware all these problems exist,” Sipe adds.

Incorrectly removed walls

Look for: sagging roofs and ceilings.

Open floor plans are appealing, but not when they overlook structural issues, which can happen when home owners fail to identify load-bearing walls. Pay attention to the age of a home, Patterson says. In newer construction, homes tend to have greater side support, which can accommodate open floor plans. Older homes relied more on the center for stability, which can mean trouble for amateur wall-busters.

DIY plumbing

Look for: wrong pipes used for connections.

A common error Patterson sees in plumbing jobs comes from home owners who purchase a sink and cabinet from a big-box store and handle the installation themselves. Using the wrong pipes often results in costly water damage. Patterson says he commonly sees flexible, accordion-shaped pipe under the sink for the drain, even though they do not comply with residential plumbing codes. Pipes should be smooth and unridged to prevent clogs or waste buildup.

Missing garage door sensors

Look for: sensors missing or not facing one another.

Garage doors can pose a big safety threat if improperly installed, Sipe says. The safety sensors must be connected and aligned correctly for the garage door to go down, and if it doesn’t, the owner may just uninstall them. Additionally, a poor connection could be the culprit of the sensor malfunction. Sipe says he often sees the safety cable being threaded incorrectly, which could cause it to break and send the garage door door crashing down.

Disarmed alarms

Look for: missing batteries or disconnected alarms.

Home inspectors aren’t always required to test smoke and carbon monoxide detectors, but many do. Municipalities often suggest installing them within 15 feet of the primary entrance to each sleeping room. Home owners often remove them if they start chirping or disconnect them to prevent false alarms as they cook. “Many times I’ll open it up and find the battery is gone,” Pegelow says. “That is a big safety concern.”

Faulty electrical

Watch for: exposed wiring and overloaded circuits.

Electrical problems often emerge when an addition has been made to a home, such as a basement or attic remodel. Home owners may add two wires to one circuit breaker where there should be only one. Or, Sipe says, he sees amateurs using a wire that’s too small in the breaker, which could pose a fire hazard.

Credit to Melissa Dittmann Tracey

Contributing Editor

Melissa Dittmann Tracey is a contributing editor for REALTOR® magazine. She can be reached at mtracey@realtors.org.

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Real Estate Know-Hows

Find out what your ideal tenant is likely to want, in terms of fixtures and fittings and décor, and give it to them.

This sounds simple but just make sure you do you research first: if your best tenant is a professional twenty-something then they’re likely to want different facilities and interior design than retirees or a family with young children.

Location is key too. Someone renting a luxury apartment in Los Angeles is quite likely to have different needs, expectations and tastes from someone renting a modest family home in Philadelphia.

Be realistic about how attractive your apartment is to potential tenants. Unless the neighborhood is rapidly improving, a rental property in a low-income area is unlikely to attract affluent tenants, no matter how well it’s decorated.

5. Install Solar Panels, Rent Storage Space, or Sell Ads

Take advantage of “green” tax incentives and rebates by installing solar panels on residential properties while they’re still available. Although at first glance it might seem that these benefit homeowners more than landlords, this is not necessarily the case. Once you’ve installed the solar panels, you can sell back excess energy to the grid, opening up another income stream from your property.

Your tenants will benefit from lower energy bills and as prices are predicted to keep rising, this is an advantage that could become even more attractive over time. This can be factored into the rent, allowing you to make a bigger rental income even as your tenant pays less overall.

If you have extra storage space, you could increase your profits by renting it to non-tenants. Further, there may be local businesses willing to buy advertising space. A simple banner hung on an exterior wall or side fence might bring in hundreds of dollars a month.

Credit to Guest Author – Ella Jameson

After graduating from university with a degree in English Literature, Ella worked as an editor and copywriter for several years before becoming a journalist.

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Real Estate Know-Hows

4 Behaviors That Could Get You Sued

August 1, 2016 nit Leave a comment

Neglecting to disclose material information.

The old saying that honesty is the best policy holds especially true when it comes to real estate. Be sure to let prospective buyers know key facts about a listing up front—even if they may cause some people to hesitate before making an offer—instead of waiting until later in the sales process or, worse, not saying anything at all.

“Disclosure upfront may be tough initially, but it’s better than a lawsuit,” says Robert A. Sayas, an attorney with Sayas, Schmuki, Rondini & Plum S.C. in Wauwatosa, Wisc. “Disclosing early is like a boxer taking a jab. You can recover. But a lawsuit is a knock-out punch.”

In addition, be sure to check with an attorney or title company if you’re unsure of anything you tell prospective buyers about a home, advises Terry Tremaine, an agent with Century 21 Mike Bowman in Grapevine, Texas. “It gives everyone a comfort level, and will project on to the sellers.”

Using an incomplete property description.

A property’s street address may be all you need to find it on a map, but you generally have to give more specific details—such as lot and block numbers—to properly fill out real estate paperwork. “Laws are very exacting regarding what constitutes a legal description,” and you could find yourself with an unenforceable sales contract if you don’t provide the required information, says Michael Baucum, a transactional real estate attorney in San Antonio. Check with local tax authorities if you’re not sure what you need to include.

Weighing in on a home’s condition.

You may be an expert on selling properties—but that doesn’t mean you should be in the business of advising people on their physical shape. If a client asks if a system in their home needs repairs before the property goes on the market, or a visitor inquires about a home’s condition during an open house, resist the temptation to offer your opinion. Instead, tell them to consult a certified property inspector, advises Brian Copeland, chief of broker services for Village Real Estate Services in Nashville, Tenn.

“Your job is to negotiate which [recommended] repairs to do,” not decide if something needs to be fixed, says Copeland. “We are not contractors or structural engineers. We are marketers. Our expertise is to keep the deal together and make the customer happy. Giving opinions outside of your expertise is a huge legal pitfall.”

Saying whether a neighborhood is “safe.”

You may have your opinions about whether a particular street is good for families with children or dicey after dark, but sharing how you feel could be a fair-housing violation. Your best bet is to let clients know that you can’t answer questions about whether a neighborhood is safe. Instead, point people toward crime statistics and other objective data, or recommend they look around the area at different times of day on their own to get a firsthand view of what it would be like to live there, says Copeland.

“It’s a slippery slope, so you have to be a steward of your words,” says Copeland. “You can’t let your guard down and start saying things that don’t have a place in our profession.”

Credit to Sam Silverstein

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Real Estate Know-Hows

Landlord Liability When a Tenant’s Dog Bites Someone

July 27, 2016 nit Leave a comment

Military Working Dogs

There’s an old saying in journalism: When a dog bites a man, that is nothing new, but when a man bites a dog, that is certainly news!

If you’re a landlord, however, and your tenant’s dog bit someone, it’s newsworthy to you. You need to know whether you’ll be held responsible.

Like most landlord-tenant issues, the answer to what happens when your tenant’s dog bites someone is that it depends, and the answer can vary by state as well.

This post will go through some scenarios to help you determine what could happen if your tenant’s dog bit someone. Please know that these are just hypothetical situations and should not be taken as legal advice. But first …

The Importance of Renter’s Insurance

If you require your tenants to carry renter’s insurance, you most likely won’t need to worry about being sued if your tenant’s dog bites someone. The tenant’s renter’s insurance will cover that.

Renter’s insurance protects you if your tenant’s dog bites someone.

The exception is if the injuries to the bite victim are so extensive that they go beyond what the renter’s insurance covers, and that doesn’t happen too often. Even if you are sued for the balance, there needs to be a case against you.

The rest of the scenarios we’ll cover will be focused on tenants who do not have renter’s insurance.

Sample Lease Clause

REQUIRED RENTAL INSURANCE. Landlord, Owner, or Manager does not maintain insurance to cover the personal property of Tenant(s) or personal injury to Tenant(s), their guests or occupants. Tenant(s) is required to obtain rental insurance in the amount of $300,000 public liability and $50,000 property damage from whatever cause to his person or property and to the person or property of those on the premises with his consent, and Tenant(s) shall indemnify and hold all other parties harmless from all claims arising from any such injury or damage throughout the term of the tenancy. Tenant(s) is responsible to obtain insurance within seven (7) days of residing on the Premises. Should any injury or damage occur within the first seven (7) days or prior to obtaining rental insurance, Tenant(s) shall indemnify and hold all other parties harmless from all claims arising from any such injury or damage.

Dog Bites: The Good News

In most cases, you are not responsible if your tenant’s dog bit someone. So breathe a huge sigh of relief.

In most cases, you are not responsible if your tenant’s dog bit someone.

You are also not responsible if you know there’s a dangerous dog on the property, but you can’t do anything about it. This could happen if you buy investment property that’s already occupied by a tenant who has a lease. As soon as the lease comes under your control, however, you need to correct the situation.

Dog Bites: The Bad News

There are some other instances where you could be held responsible if your tenant’s dog bit someone.

Scenario 1: You knew the dog was dangerous

Let’s say that when you interviewed a potential tenant, they had their dog with them. The dog was big, bared its teeth at you, and lunged at you. When you asked the potential tenant what’s up with the dog, they were honest and let you know that the dog had bitten someone before. They then explained that this is their guard dog.

You consider the story, and you like the tenant (who passed your background check). So you decide to rent to this person and allow the dog, even knowing the dog is dangerous.

In this case, if the dog bites a visitor to the property or bites someone in the common area, you could be held responsible for the injuries. Why? Because you knew the dog was dangerous and let the dog live on your property anyway. Some courts consider landlords who knowingly rent to people with dangerous dogs irresponsible and negligent.

Scenario 2: You didn’t enforce your own lease

You might not allow dogs in your rental unit, and you have a provision in the lease that states this policy. That is not enough to protect you if you don’t enforce your no-dog policy.

Let’s say that you know that your tenant is keeping a dangerous dog on the property — a direct lease violation. You’ve seen the dog when you stopped by for a maintenance call. The dog was chained outside and barked ferociously at you. Yet, you did nothing. You might be held responsible if that dog were to bite someone.

Scenario 3: You take care of the dog

You live on one side of a duplex and rent out the other side. You struck an arrangement with your tenant that you’ll take care of their dog when they need to go out of town for work. The dog bites someone while it was under your care. In this case, you would be considered an owner and would probably be held responsible.

Dog

Scenario 4: You didn’t fix the gate

Let’s say that you rented your property to a dog owner.

You have a fenced-in yard that you use as a selling point in your rental ad, even. But now the gate is broken and no longer latches.

The tenant let you know immediately and is concerned because the dog keeps getting out, and this dog is a pit bull who has a history of attacking other dogs. You plan to get around to fixing the gate, but the dog bit someone before you fixed it. You could be held responsible.

Scenario 5: Some people sue even when they have no case

People can and do try to sue for anything and everything, but that doesn’t mean they have a case. For example, if your tenant’s dog bites someone while your tenant is away from the property with their dog, you would almost never be responsible. However, if you know that your tenant keeps a dangerous dog on your property, and you know that the dog roams the neighborhood all the time, a court might find you responsible if that dog injures someone.

Take Precautions

If you allow dogs at your rental property, take the necessary steps to help ensure guests to the property and neighbors are safe. If you know the dog is dangerous, don’t let your tenant keep it if you have control of the situation.

Nolo has a fantastic list of historical cases regarding landlord liability for dog bites. If you want to see how judges have ruled in the past, check them out.

You may also want to suggest or require that your tenant carry renter’s insurance, and make sure that you have adequate liability coverage from your landlord insurance policy … just in case.

credit to Laura Agadoni

Laura Agadoni is a landlord and journalist whose articles appear in various publications such as Trulia, The Houston Chronicle, The Motley Fool, SFGate, Zacks, The Penny Hoarder and azcentral.

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Real Estate Know-Hows

Top 10 Pain Points for Landlords and How to Fix Them

July 25, 2016 nit Leave a comment

Rent, property taxes, insurance

Being a landlord can be incredibly profitable, but also very difficult at times.

I don’t know about you, but my properties aren’t exactly on Easy Street.

Over the last 10 years, I’ve experienced many of the issues that plague owners, and cast fear into the hearts of wanna-be landlords.

Through endless reading, trial and error, and tenant feedback, I’ve learned that almost every rental problem has a solution.

Based on my experience, here are the top 10 pain points that most landlords will eventually experience, along with ways to fix or prevent them.

1. Loss of Rent/Income

Vacancy
Rent Default (Tenant Stops Paying)
Tenant Hold-over (Tenant Won’t Leave and Won’t Pay Rent)

Solutions:

To reduce vacancy, start listing your units for rent 60 days prior to the end of the current lease.
Screen your tenants better – make sure you don’t let a deadbeat or a scammer into your property.
Terminate the lease immediately for nonpayment – with proper notice for your state, of course.
Learn about your local eviction process, and be ready to file the paperwork immediately after lease termination.

2. Eviction

Court Costs of Eviction
Strict Legal Rules for Eviction
Tenant Retaliation by Damaging the Property

Solutions:

Require a large security deposit (1-2 month’s worth of rent, depending on what is allowed in your state) at the beginning of the lease to alleviate potential expenses of court costs and damages.
Learn about your local eviction process, and be ready to file the paperwork immediately after lease termination.
Include a clause in your lease that mandates court costs and attorney’s fees be paid by the prevailing party.

3. Stress of Property Management

Cleanliness of Tenants
Unintentional/Intentional Destruction of Property
Illegal Drug Use
Lawsuits
Chasing Down/Collecting Rent
Tenants Lying to You
Noise and Nuisance Complaints
Dealing with Disgruntled Neighbors of Your Rental
Police/Domestic Violence Issues
Ensuring Tenant Satisfaction
Ensuring an Unbiased and Fair Screening Process

Solutions:

Find a rock-solid lease and stick to it.
Stop by or drive by the property at least once a month.
List the tenant’s cleaning responsibilities in the lease.
Put everything in writing (or email).
Ask the neighbors to call you first, whenever there is an issue.
Don’t be afraid to call the police.
Find a local landlord-tenant lawyer and build a friendship with him or her, before you actually need an attorney.
Use an automated tool, such as Cozy, to accept applications, screen tenants, and collect rent online.

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4. Stress on Personal Life/Relationships

Spouse or Partner Worried About Finances
Always Being On-call for Rental Issues

Solutions:

Include your spouse or partner in the financial decisions and respect their opinion.
Keep a three- to six-month emergency (or vacancy) fund for each property. Yes, it takes a while to build that up, but you’ll sleep better.
Ask your tenants to report issues via email or text, which only takes a second to review. If it’s urgent, you can deal with it immediately.

5. Tenant Turnover

Trying to Find a New Tenant
Cleaning up After a Previous Tenant
Feeling of Rejection When Prospective Renters Don’t Want to Rent Your Place
Exhaustion from Showing a Unit Week After Week
Handling, Storing and Disposing of Abandoned Personal Property

Solutions:

When looking for new tenants start early, while the unit is still occupied.
List your units for rent 60 days prior to the end of the current lease.
Refresh your listing on Craigslist every three to five days.
Don’t sweat the clean-up, just hire a maid service and deduct the cost from the deposit (excluding normal wear and tear).
Schedule showings back-to-back, every 30 minutes, in a four-hour block on a Saturday. I call this “The Landlord’s Open House.”

6. Repairs

Knowing When to Do It Yourself and When to Hire a Pro
Finding and Evaluating Qualified Contractors

Solutions:

Create a handy tool bucket that you can keep in your trunk.
Your rentals will provide great opportunities to learn basic handyman skills, but don’t get in over your head. I’ve made small leaks much worse because I didn’t know what I was doing.
Buy an all-purpose DIY book, and skim through it regularly. Keep it in your car, so you always have it nearby.
Ask to observe every service professional that comes to your property. You’ll learn a lot through observation.
Research contractors on Angie’s List, Handy (formerly Handybook), Yelp, and the Better Business Bureau.

7. Compliance with Laws

Obtaining Business Licenses and/or Landlord Registration
Understanding Landlord-Tenant State Laws
Knowing Landlord vs. Tenant Rights

Solutions:

Don’t try to circumvent the government. You may get away with it for a while, but eventually it will catch up to you.
Learn your state’s rental laws.
Join a local landlord association, rental housing association, or real estate investor association to network with other landlords.
Attend landlord training in your city. Landlordology provides free guides and occasional online webinars. Join our newsletter to stay in the loop.

8. Adequate Insurance

Insuring Each Property
Insuring Against Rental Income Loss and Lawsuits
Insuring Your Portfolio

Solutions:

You might get a better rate if you insure all your properties with a single provider.
Inform your provider that your properties are rentals, and not homeowner occupied (critical!).
Sign up for “Fair Rental Income Protection” in your policy to cover the rent during a covered loss.
Make sure you have proper coverage.
Consider getting “umbrella” insurance to cover excess liability and risk not covered by the individual policies. An umbrella policy will insure your entire portfolio, not just your properties.

9. Leases

Finding a State-compliant and Bullet-proof Lease
Explaining Lease Clauses to Tenants
Knowing Whether or Not Your Lease Will Hold up in Court

Solutions:

Use a premium, state-specific lease that has been reviewed by lawyers. It’s worth the investment. Check our toolbox for suggestions.
Don’t ever use a “free lease” that you find on the internet. It could cost you thousands in lawsuits.
Review your state laws for any required or prohibited clauses.
Review the entire lease with the applications before signing.
Use online document signing tools, like SignNow, HelloSign, and Docusign, to digitally sign leases remotely.

10. Finances

Keeping Track of Security Deposits
Calculating Interest on Deposits
Commingling Funds

Solutions:

Keep the security deposit in a separate, interest-bearing bank account.
Open a separate security deposit bank account for each property.
Collect and give interest on the deposit money if you are required to by law. If the statutes don’t regulate interest, just give the tenant all the interest that is accrued.

BONUS: Taxes

Keeping Track of Income and Expenses
Calculating Depreciation
Sending out 1099s to Contractors
Deciding to DIY or hire a CPA

Solutions:

Use an all-in-one property management software that lets you track income and expenses. If not, there are other great tools, like Freshbooks, Excel, and Quickbooks.
Property Managers (not landlords) who pay a contractor more than $600 in a given year, must send out 1099s. Some tools like, Buildium and Appfolio can make this task easier.
TurboTax can easily prepare and file the taxes for most small landlords. If you have multiple business entities, joint ownership, or tax shelters, then you should probably hire a CPA.

Credit to Lucas Hall

Lucas is the Chief Landlordologist at Cozy. He has been a successful landlord for over 10 years, with dozens of happy tenants and a profitable income property portfolio.

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Official Rules and Regulations

Details:

Security Deposit:

Lease, Rent & Fees:

Notices and Entry:

Disclosures and Miscellaneous Notes:

Court Related:

Business Licenses:

Credit to Lucas Hall

Don’t position yourself as the primary source of information.

Be upfront about whom you’re working for.

Never give tax advice.

Don’t interpret HOA rules or budgets for clients.

Keep a record of what you say.

Who Made it Dirty?

Know the Laws for Cleaning, Maintenance, and Repairs

1. Speak with Your Landlord

2. Write a Repair Request

3. Propose Mediation

4. Clean Carpet Stains Yourself

Credit to Jimmy Moncrief

Wobbly decks

Incorrectly removed walls

DIY plumbing

Missing garage door sensors

Disarmed alarms

Faulty electrical

Top 20 Questions to Ask a Property Manager

1) What are the various services that you offer to your clients?

2) How many rental units do you manage?

3) What experience does your company owner have in managing rentals?

4) How do you determine rent amount?

5) Are you currently an active real estate investor in your market?

6) Under what conditions can I cancel my management contract?

7) What are the management fees and/or pricing options when the property is being rented?

8) Are their fees when the property has no tenants?

9) What miscellaneous fees could I be charged for the management of my property?

10) Do I have to sell my property with you if I want to list it?

11) Do you offer direct deposit for your owners?

12) How do you collect rent from tenants?

13) Do you conduct property inspections and, if you do, what charge is associated with them?

14) Do you offer eviction warranty (also called a “screening guarantee”?

15) What steps do you take to market properties?

16) How long are your properties typically vacant?

17) What are your income and screening requirements for applicants?

18) What control do I have over the tenant lease agreement?

19) Do you mark-up maintenance and repairs?

20) How often will I get updates on my portfolio?

Credit to Lucas Hall

1. Crunch the Numbers

2. Choose a Desirable Location

3. Choose your Target Tenant

4. Select the Property based on Return on Investment

5. Be Prepared for the Worst

1. Increase the Rent, but be Competitive

2. Work Smarter, Not Harder

3. Take Advantage of All Tax Breaks

4. Target Your Ideal Tenant

5. Install Solar Panels, Rent Storage Space, or Sell Ads

Credit to Guest Author – Ella Jameson

Neglecting to disclose material information.

Using an incomplete property description.

Weighing in on a home’s condition.

Saying whether a neighborhood is “safe.”

The Importance of Renter’s Insurance

Sample Lease Clause

Dog Bites: The Good News

Dog Bites: The Bad News

Scenario 1: You knew the dog was dangerous

Scenario 2: You didn’t enforce your own lease

Scenario 3: You take care of the dog

Scenario 4: You didn’t fix the gate

Scenario 5: Some people sue even when they have no case

Take Precautions

credit to Laura Agadoni

1. Loss of Rent/Income

Solutions:

2. Eviction

Solutions:

3. Stress of Property Management