Landlord Tenant FAQs
Rent, control, and deposits:
- Introduction to the subject
Housing is just another commodity.
In a free society the amount of rent a landlord can charge for their property is determined by market forces. Usually. Like any other commodity or service, the cost of housing is always a factor of supply and demand. The supply of housing is a naturally factor of the cost of providing it, and demand is always a factor of a tenant's ability to pay.
When and where there are reports of a housing shortage, that almost always means there is a shortage of affordable housing; i.e., it costs more to provide housing than it will bring in the market. The issue is addressed in some depth on a RHOL page titled Cost vs. Value. Costs are often increased substantially by government fees, mandates and regulation while value is beyond government control and determined by the market.
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How much rent should a landlord charge?
Landlords should charge the highest amount of rent they can get, and still attract and keep good tenants who will care for the property and pay their rent on time; except in certain areas covered by rent control laws (see Rent Control, below).
It is very import to always consider the cost of turnover when considering raising rents. The important number is Net Operating Income, not the gross scheduled rent.
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When is the rent due?
Customarily, leases and rental agreements require rent to be paid in advance, usually on the first of every month. However, landlords and tenants can contractually agree to almost any other interval and make the rent due on any day of the month they wish. Additionally, unless the lease or rental agreement specifies otherwise, there is usually no legally-recognized grace period. In other words, if a tenant hasn't paid the rent by the due date, the landlord can start eviction proceedings the next day.
Note our continuing use of the qualifier word, "usually". Because the typical landlord is not politically active, there are a few states that try to regulate almost every detail of landlord tenant relationships and even prohibit a landlord from starting an eviction until the rent is a specified number of days late. The worst we have seen is Rhode Island. Their law prohibits a landlord from sending a five day notice to pay the rent or quit until the rent is at least 15 days late. Go figure! See your state's: Landlord tenant law
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What about late fees?
Some landlords charge fees for late payment of rent or penalties for bounced checks; these fees are usually legal if they are reasonable. However, some states regulate the amount that can be assessed.
Massachusetts not only prohibits late fees, their state law will not even allow discounts for timely payment. See your state's: Landlord tenant law
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How much can a landlord raise the rent?
Under a periodic rental agreement, as in a month-to-month or week-to-week, a landlord can raise the rent (subject to any rent control laws) with proper written notice, usually, one rental period, which is typically, 30 days.
With a fixed-term lease, the landlord may not raise the rent during the lease, unless the increase is specifically called for in the lease, or the tenant agrees.
Consider a situation under a fixed term lease where a rental unit is severely damaged by fire. The landlord offers the tenant another unit during repairs, then up-grades the original unit and demands a higher rent if the tenant wants to move back in. The language contained in the lease that addresses fire or causality would most likely determine the result.
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Is a fixed term lease better than periodic? (month to month)
There are many good reasons for either view. Most lower-income housing providers prefer the shortest possible rental period to help facilitate a speedy eviction, when necessary.
Under most state law, an eviction for non-payment of rent is handled as a summary proceeding limited to the issue of past due rent - where there is no other dispute as to facts. An eviction for any other cause could require a full blown trial of fact where each side is given an opportunity to call witnesses, present testimony and perhaps evidence, to prove his case for or against termination.
Middle and upper income landlords (and tenants) usually prefer a fixed term lease to help keep their life and economics more predictable. There may be other good reasons for a fixed term as well. For example: Florida charges a 10% tourist tax on any lease or rental agreement of less than six months. Hawaii imposes two different taxes, depending on the lease term.
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How much rent is due when a tenant holds-over at the end of a lease?
Tenants are expected to leave on or before the day their leases or rental periods end, unless they have made other arrangements with their landlord. Normal rental periods start on the first day of a month and end on the last day.
A lease always terminates on certain day, and tenants must leave by that date, or they are responsible for additional rent.
Courts should hold that the amount of rent due is for an entire additional rental period, not just a prorated amount for the number of days the tenant holds over. When someone rents housing by the day, as in a hotel, the charges are substantially more than a monthly rate.
However, a landlord has a legal duty to mitigate a tenant's damages and in the event the property is re-rented before the end of the rental period, the tenant would be entitled to a refund of the amount collected by the landlord for that portion of the period.
Some states have addressed holding-over in their landlord tenant law and allow double or even triple rent for any period beyond the agreed termination date as damages.
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How Rent Control Works
Rent control in the U.S. is a relic of price controls implemented by the federal government during the second world war. Most areas of the country discontinued rent control about the same time as price controls on other commodities, like gas, tires and butter, that had been in short supply because of the war.
However, in some cities, where tenants constituted the largest voting block, rent control was retained. Then, during the radical 60s, some student voters took control of their local governments and instituted new rent control programs for their self interest.
As a result, several American states have since enacted statutes that prohibit municipalities from enacting rent control ordinances (also called rent stabilization, maximum rent regulation or some such term). (See below.) Now, communities in only five American states (California, the District of Columbia, Maryland, New Jersey and New York) and the Canadian province of Ontario, still have have laws that limit the amount of rent landlords may charge. * Massachusetts voters finally prohibited the practice in 1996.
Rent control laws typically set a base rent for each rental unit, and limit the circumstances and the times when rent may be increased. Many rent control laws require landlords to have a legal or just cause--that is, "a good reason" to raise the rent or evict a tenant. For example: if the tenant doesn't pay rent or if the landlord wants to move into the rental unit.
Landlords and tenants in New York City, Newark, San Francisco and other cities with rent control, should be sure to get a current copy of the ordinance and any regulations interpreting it.
We are convinced that it will make us ill when we have to read and interpret their regulations in order to publish them here, so we are putting it off as long as possible; hoping they will have gone away by the time we get to it.
We believe that rent control is an abomination and those who benefit from it are parasites on the community. Rent controllers are so contemptible that we don't even want to list them so you will have to check the phone book for the address and phone number of the local rent control board. You might also contact the mayor or city manager's office. It is probably best that you don't use our language with them - if you have to try to live under their control ... for now.
* Massachusetts landlords, and tenants who were not on the take, recently fought the law and won a statewide referendum outlawing rent control in their state. You might want to check with our friends at the Rental Housing Association of Greater Springfield, RHAGS, or the Small Property Owners Association of Cambridge to get support which could help you do it in your state too.
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Does Rent Control Help Low-Income Tenants?
Hell no! In fact, about a dozen states so far have actually enacted laws that prohibit local governments from even considering rent control, or anything like it. Here is an example excerpted from Oregon law:
(Section) 91.225 - Local rent control prohibited; exclusions; exceptions.
(1) The Legislative Assembly finds that there is a social and economic need to insure an adequate supply of affordable housing for Oregonians. The Legislative Assembly also finds that the imposition of general restrictions on housing rents will disrupt an orderly housing market, increase deferred maintenance of existing housing stock, lead to abandonment of existing rental units and create a property tax shift from rental-owned to owner-occupied housing. Therefore, the Legislative Assembly declares that the imposition of rent control on housing in the State of Oregon is a matter of statewide concern.
(2) Except as provided in subsections (3) to (5) of this section, a city or county shall not enact any ordinance or resolution which controls the rent that may be charged for the rental of any dwelling unit.
The exceptions most states include in their legislation deal with government owned or subsidized housing. For example, if a landlord chooses to accept a federal government Section 8 rent subsidy, they must rent the dwelling at "Fair Market Rents" as determined by HUD. However, the important point is that no landlord is required to participate.
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What Is A Security Deposit?
A security deposit is any surety or advance rental payment other than an advance for the first month's rent or a deposit for a pet, a key or any special equipment. A security deposit remains the tenant's property but the landlord holds a security interest in it. Security deposits must usually be kept in an escrow account in a bank.
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How much security deposit can a landlord charge?
Every state allows landlords to collect a security deposit when the tenant moves in. The general purpose is to assure that the tenant pays the rent when it is due and returns the rental unit in as good condition as when they moved in. About half of the states limit the amount landlords can charge to an amount of not more than a month or two of rent.
As noted above, there can usually be additional deposit requirements for furnished units, special equipment and pets. However, some states regulate every kind of deposit. See California LT Law for examples.
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What can a landlord do with a deposit?
Because landlords have a well earned reputation for being unwilling to return security deposits, perhaps because they have spent the money, most states require landlords to put the deposits in a separate account and keep their greedy hands off of them.
Arkansas law stipulates that security deposits be kept in non-interest bearing accounts to help reduce any incentive for landlords to hang on to the tenant's money . Many other states require that tenants earn interest on the deposits. Calculating the amount of interest due the tenant varies widely from state to state and can become a bookkeeping nightmare. Pennsylvania requires interest on any deposit of more than $100, but only after the second year. Virginia's Security Deposit Law is among the most cumbersome. They require interest, starting with the 13 month, tied to the Federal Reserve Board discount rate, and calculated every six months.
Wallace S. Gibson [ Cvillecpm@aol.com ] a Certified Property Manager and owner of Landlord Tenant Services and Gibson Management Group, Ltd. in Virginia wrote a page for Rental Housing On Line explaining all the steps necessary just to calculate the interest for a typical tenant in her state.
The failure of landlords to willingly return security deposits in a timely manner has led some counties and municipalities to add even more regulation than their state law requires. See Wisconsin LT Law for examples.
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What are the rules for returning security deposits?
Landlords may normally make certain deductions from a tenant's security deposit, provided they do it correctly and for the right reasons. For example: most states do not allow deductions for any damage that can be attributed to "normal wear and tear". While the specific rules vary from state to state, landlords have a set amount of time in which to make their claim for damages or set-off's and return deposits, usually 14 to 30 days after the tenant moves out. (voluntarily or by eviction).
Many states require something like a move-in or inventory checklist, noting any problems that exist, when a tenant moves in. Then, landlords must provide a written itemized accounting of every deduction; for unpaid rent, repairs, utilities or damages not on the move-in list, that go beyond normal wear and tear, together with payment for any deposit balance.
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What is a tenant's recourse when a landlord keeps their deposit?
A tenant may sue a landlord who fails to return a security deposit - when and how the law requires - or one who violates other provisions of security deposit laws, such as separate account and interest requirements. Actions for security deposits are usually brought in small claims court where attorneys are not necessary or even allowed. In some states, a tenant who prevails may not only recover the entire deposit, but even two or three times the amount, plus other damages.
When a tenant disputes any deductions a landlord makes from their security deposit in some states, like Michigan, the landlord is required to seek a judgment for that amount in small claims court, or return the entire deposit.
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