Last month, this column featured a brief discussion of Senate Bill 282’s newest wrinkle for landlords to consider, the new prohibition on enforcement of unauthorized guest provisions.
As many landlords have (or will) come across unauthorized guest scenarios, it is important to further discuss what rights and remedies landlords have remaining after the passage of SB 282.
The Non-Tenant Guest rules are found within Section 14 of the bill.
It begins with a prohibition against enforcement of maximum occupancy guidelines lower than that required by law. It follows by prohibiting landlords from enforcement of any prohibition on the maximum duration of a guest’s stay. Landlords with solid rental agreement forms have provisions discussing the maximum guest stay, and this provision effectively replaces those with a “15 days in any 12-month period” rule.
The above rule is the first item to focus on. Unauthorized occupant situations are notoriously difficult to prove, as it is impossible to police the inside of your tenants’ dwelling unit. However, to trigger your rights and remedies, landlords will still have to be able to prove this threshold issue; that their tenant had a guest staying in the unit for longer than 15 days in a 12-month period. If you cannot prove that issue, there are no rights to trigger.
If landlords can prove the above, SB 282 states the landlord may then require that (a) the tenant’s guest satisfy the screening or admissions criteria used by the landlord for non-fiscal matters, and (b) the tenant and the guest enter into a temporary occupancy agreement as provided in ORS 90.275. As you can imagine, it is unlikely that many tenants and their (un)authorized guests will initiate this discussion. There is usually a reason these guests do not jump at the opportunity to apply.
So how can you protect yourself and other tenants using SB 282?
If you can prove the 15-day rule, it may help to send a warning notice pursuant to ORS 90.412 as a start. This notice will serve multiple purposes. First, it will preserve the issue, as a properly served ORS 90.412 notice will allow you to accept rent without worrying about a waiver issue.
Second, it will assist in rebutting the tenant’s inevitable contention that they did not know what they were to do before they received a For Cause Notice for violating SB 282.
If you have provided your tenant’s guest the opportunity to be screened, and they decline or fail screening, or if the tenant and guest refuse to enter into a temporary occupancy agreement, landlords have the same rights/remedies as they did before. A well-tailored For Cause Notice directed at these failures/refusals will require that individual to vacate the unit. If they do not, the landlord may be able to file an eviction, based upon that Notice.
The law continues to evolve, as new issues arise every day. It is important for landlords to continue to focus on their rights and, even more importantly, how landlords can use those rights to protect their other tenants.
While SB 282 adds a new layer to unauthorized guests, the threshold issues are the same. If the guests fail screening, refuse to enter into temporary occupancy agreements allowed by law, or cause issues during their stay in the premises, landlords should act to remove those individuals using the tools with which they are familiar.
Bradley Kraus, Portland attorney
Brad Kraus is a partner at Warren Allen LLP. His primary practice area is landlord/tenant law, but he also assists clients with various litigation matters, probate matters, real estate disputes, and family-law matters. A native of New Ulm, Minnesota, he continues to root for Minnesota sports teams in his free time. You can reach him via email kraus@warrenallen.com or 503-255-8795.
Pandemic pricing is officially over, as rent growth has now been outpacing prior-year averages for several months, according to the latest report from Apartment List.
“The national median rent has now officially surpassed the level where we expect it would have been if the pandemic had never happened,” wrote housing economists Chris Salviati, Igor Popov, and Rob Warnock of Apartment List in the report.
While rents in some key markets are still below pre-pandemic levels, rent prices in these cities, such as Seattle and San Francisco, are rising rapidly.
Record month in rent increase wipes out pandemic pricing
Up by 2.3 percent in May, the national rent index by Apartment List is showing the largest monthly gain since the company began doing estimates in 2017.
This is the third straight month for record-setting rent increases, the company said.
Prices rebounded in March almost to pre-pandemic levels, and “this month, we hit a new milestone — our national index is now above the level where we project it would have been if the pandemic-related price declines of 2020 had never occurred at all,” the housing economists said in the report.
Rents in hard-hit markets continue their rebound
In many hard-hit cities however, rents are still below pre-pandemic levels. But these cities are now showing strong rent increases.
San Francisco made headlines during the pandemic due to dramatic rent declines, showing as much as 26 percent.
However, the city is now showing a rent rebound. Since January, rents have risen 13.4 percent. While it looks like the pandemic pricing is being left behind in San Francisco, it is still good to remember rents there are 16.8 percent below pre-pandemic levels.
“Beyond San Francisco, we’re seeing a similar trend play out in all of the cities where rents had been falling fastest. Nine of the 10 cities with the sharpest year-over-year rent declines have now experienced positive rent growth for four consecutive months. Four of these cities – San Jose, Washington, D.C., Boston, and Minneapolis – have seen rents increase for five consecutive months, the report says.
Shortage of rental housing
As rents increase rapidly in many markets, there is still a shortage of rental inventory across the country; and it’s still unknown as to how many renters will be moving soon.
“As vaccine-distribution continues to gain momentum, we may be seeing the release of pent-up demand from renters who had been delaying moves due to the pandemic. Whereas last year’s peak moving season was halted by the pandemic, this year’s seasonal spike appears to be making up for lost time,” Apartment List said in the report.
Many investors recoil at the thought of selling a piece of investment property. And they usually have a good reason, whether it’s missing out on future appreciation, having to pay a massive tax bill or some other factor.
Yet it can often make good sense to sell your property, thanks to a real estate investment alternative that simplifies your life and lets you defer the taxes via a 1031 exchange.
Let’s take a look at six reasons you might want to consider selling and reinvesting in this alternative…
Reason #1: You’re sick and tired of having to actively manage your real estate
Let’s face it, managing your real estate is often a real hassle. You have to keep your eye on the ball 24 hours a day, seven days a week. And dealing with tenants, toilets and trash just gets old after a while.
Sometimes even the sound of a ringing phone can fill you with dread.
Sure, you can use a property management company to handle many of the details, but they come with their own set of hassles and can cost you a big chunk of your rental income.
But imagine if you could continue investing in real estate while eliminating all those hassles and costs.
The good news, you can. How? By investing fractionally in a carefully selected portfolio of income-producing investment real estate that you don’t have to manage or have someone else manage.
Instead, you can just relax and enjoy your life while somebody else does all the worrying and deals with all the hassles.
I’ll tell you more about the alternative that lets you do that in a moment, but first let’s look at…
Reason #2: You can take advantage of passive real estate investing for continued income with no management responsibilities
When you invest in real estate the way I’m going to show you, you’ll be a true passive investor.
You quite literally won’t have a single responsibility when it comes to managing your property, nor will you have to worry about any of the day-to-day hassles. They’re now somebody else’s problem.
And that means you’ll have more time and more energy for your family, your friends and your hobbies. Better yet, you’ll feel better thanks to the reduced stress and you’ll be more fun to be around.
Reason #3: You can realize the value of your real estate now instead of later
Many investors I talk to like the idea of selling their investment property and realizing its value.
However, they don’t want to pay the taxes, nor do they want to spend the time and effort needed to find a new piece of property to roll their money into.
Those are two of the things that make fractional investing in a portfolio of real estate so attractive. You don’t have to spend a lot of time searching for a new property — it’s all done for you.
Better yet, by reinvesting your money with a tax-deferred 1031 exchange, you can move on with your life.
Reason #4: You can quickly and easily become more diversified
Imagine if you could easily spread your real estate investments into different types and sizes of property in variety of geographical areas.
You’d have instant diversification which many investors value, especially in these uncertain times.
That’s the nice thing about the fractional real estate investments I’m going to tell you about in a moment. They’re stand-alone real estate investments in a variety of places. And we’ll help you choose the properties that works best for you.
Reason #5: You get the opportunity to invest in larger real estate deals
One of the nicest things about fractional ownership of real estate is that you can, if you wish, get pieces of larger real estate deals than you do now.
Maybe you like the prospects for a certain type of real estate — but thought it was out of reach because of the size of the required investment.
But now, with fractional ownership, you can get a piece of just about any type of real estate investment you like, no matter how big.
And I’ll show you how in just a moment.
Reason #6: You can use a 1031 exchange to defer the taxes when you sell your property
Occasionally, the tax code actually makes sense. And one of those occasions is with 1031 exchanges, which allows you to sell a property at a hefty profit and defer the taxes when you move your money into a “like-kind” property.
Most investors consider “like-kind” to be an imposing limitation, but the fact is, the rules are less rigid than you might think. For example, moving from an apartment building into a piece of raw land might not seem a “like-kind” exchange, but the rules allow it.
However, there are time limitations that must be followed to the letter. For example, you have to identify a replacement property within 45 days of the day you sell your property. And you have to close on a new real estate investment within 180 days of selling your property.
It generally makes sense to work with a specialist in 1031 exchanges to make sure you stay within the IRS’s rules, and that your transaction is completed on time.
Find the properties that fit your investment objectives
Kay Properties & Investments specializes in 1031 exchanges. And we’ll work with you to find the property or properties that fit your objectives as an investor.
We also offer you the opportunity to make fractional investments in these properties.
This real estate allows you to invest passively without any of the responsibilities of active management. It also lets you diversify your real estate portfolio far beyond what you’re doing now. And you can defer the taxes on any properties you sell.
Please contact Kay Properties to get a better understanding of how you can utilize the 1031 exchange to get all these benefits and more.
For more information on how 1031 exchanges work and your available investment options, please visit www.kpi1031.com. When you register, you’ll receive a free book on 1031 exchanges and DST properties. You’ll also find valuable information as you decide what the right strategy is for your specific 1031 exchange.
About Kay Properties and www.kpi1031.com
Kay Properties is a national Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market. Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have participated in over 15 Billion of DST 1031 investments.
This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Securities offered through Growth Capital Services, member FINRA, SIPC, Office of Supervisory Jurisdiction located at 582 Market Street, Suite 300, San Francisco, CA 94104.
The COVID-19 pandemic has thrown everything out of whack including credit reporting.
Creditors have made unprecedented accommodations to help struggling debtors. As a result, you’ve had to shift the way you reported credit to ensure your clients and tenants aren’t adversely impacted. Datalinx has tried to keep you abreast of all the latest changes in credit reporting to ensure you have the most up-to-date reporting guidance.
Changes in eviction reporting
If you are a property owner or manager who reports evictions, you’ll want to pay attention to this latest advice from TransUnion:
Based on various state regulations and executive orders related to COVID-19, TransUnion is advising that you discontinue reporting Special Comment Codes QQ‐Eviction (non‐legal action) and RR‐Eviction until further notice. TransUnion has made the decision to remove accounts reported with these Special Comment Codes from our database. We will advise once you can resume reporting Special Comment Codes QQ‐Eviction (non‐legal action) & RR‐ Eviction.
As previously communicated, if a resident is confirmed to be affected by a natural or declared disaster and is not able to make payments, you should report the resident as Current (Rental/Lease Status = 11) with a Current Balance of $0 and Payment Amount Confirmed of $0. Subsequently, for any month that was impacted, you should report a “D” in the Rental History Profile to indicate that no Payment History was available for those months.
More eviction guidance
On September 4, 2020, the Centers for Disease Control and Prevention (CDC) issued a temporary eviction moratorium which extends through December 31, 2020. (You may remember that the CARES Act included an eviction moratorium which expired on July 24, 2020.)The CDC’s goal is to prevent further spread of COVID-19 by evicted individuals and families, but nonetheless has a direct impact on creditors.
Have tried to obtain all available government assistance,
Expect to meet certain maximum earnings guidelines,
Are unable to pay full rent,
Are trying to make partial payments,
Would become homeless or need to move into a shared residence if evicted, and
Still have to comply with other rental obligations.
Renters seeking protection under this moratorium are required to submit the declaration to their property owners/managers. After the moratorium expires on December 31, 2020, property owners may require payment in full. Failure to pay at that time could result in a legal eviction.
Questions?
If you have questions about reporting evictions to the credit bureaus, reach out to Datalinx. Our experts can help you navigate the complicated waters of COVID-19 credit reporting!
The Oregon Supreme Court last month heard arguments from landlords who lost appeals in lower court rulings that upheld the Portland Relocation Ordinance, according to attorney John DiLorenzo.
The landlords hope they will win with the Oregon Supreme Court.
“I think the argument went quite well. There was quite a bit of banter back and forth among counsel and the justices,” said DiLorenzo, who represents the landlords appealing earlier court decisions.
The landlords, who lost in lower court rulings, argue the city ordinance is in conflict with state laws that ban rent control. On March 7, 2018, the Portland City Council made the ordinance permanent and extended its application to landlords who own as few as one rental unit. The ordinance requires landlords to pay tenant moving costs if they want to increase rent by 10 percent or do no-cause evictions to move tenants out to rehab old apartment buildings to upgrade them.
During arguments one judge offered some thoughts that were encouraging to the landlords’ case.
“It doesn’t seem unreasonable to me to say that is indirectly the means of controlling the rent,” asked Justice Thomas Balmer. “And certainly the City Council meeting suggests that’s the way they viewed it,” according to Oregon Public Broadcasting.
Deputy city attorney Denis Vannier argued that it does not matter what council members said about the ordinance in the past — it’s how the ordinance functions that is important.
While it is not the kind of official rent-control policy seen in New York or San Francisco, DiLorenzo argued the rule discourages rent increases — and, therefore, is barred by state statute.
“The big question is, ‘What falls within that scope?’ And we believe that ordinances that control the rent do,” DiLorenzo said. “The court of appeals got hung up on the difference between a noun and a verb,” he told Oregon Public Broadcasting.
“The legislature has determined that rent control is a matter of statewide concern and proclaimed that no local government may enact any ordinance that either ‘controls the rent that may be charged for the rental of any dwelling unit,’ ORS 91.225(2), or that is inconsistent with that prohibition, ORS 91.225(7).,” DiLorenzo said when the trial court’s decision was appealed to the Court of Appeals.
The Oregon Court of Appeals ruled last year that the ordinance was not a form of rent control, as it did not put a hard cap on the amount a landlord could charge a tenant.
There was no indication when the Oregon Supreme Court might issue a ruling.
The national eviction moratorium will end in about a month and as a landlord do you have a plan? Which of three buckets will you be in? That is this month’s article by veteran real estate investor and property manager David Pickron.
Recently I was at a birthday party where young children were participating in some old-fashioned games. One that struck me particularly was musical chairs. As an adult, I now realize the anxiety that was generated by that game; will I be left out or will I be the last one standing? As each round progressed and more players and chairs were removed, I could see that unique mixture of fear and fun fill the faces of these children as they competed to be the last person with a chair to call home.
Over the past year in meeting with landlords across the country, I have come to know that look all to well as we have tried to navigate the eviction moratorium that has affected our industry. You may have even seen that face in your mirror this morning.
As March 2021 ended, once again the eviction moratorium was continued to June 30. For most of us I don’t think this came as any great surprise. Even though the legislature approved rental relief for affected landlords, there just wasn’t enough time to get that money out to landlords (these are the same people who were able to get PPP business loans out and funded within weeks). I predict that this will be the last extension and I’m already prepared for many of you to let me have it if I am wrong. I hope and pray I am right. Let’s assume that I am right, and that the eviction moratorium completes its run at the end of June. The rental-housing market will immediately be thrust into an unforgiving version of adult musical chairs.
Whether you have been paid every month, getting partial payments here and there, or absolutely have no communication with your tenant, there are things you should plan for now to protect your investments. I believe it is easiest to break down the grouping of landlords into three buckets as follows.
Bucket 1: Retain
You are in bucket 1 if you have received all your rent and the pandemic did not hurt you personally. Congratulations, many of us are jealous. Your tenants weathered the storm and made you a priority. I would caution you to not take them for granted. A lot of things can change over the course of a year (new job, new child, new pet) and those changes may prompt a move by this valuable tenant. These tenants know their value and will have the power to move wherever they want because their credit and residential history is perfect. Whether looking for a bigger home or a shorter commute, when this game of musical chairs starts, they may be tempted to vacate your property. These are “dream” renters, and you cannot afford to let them go. I suggest a couple of ideas to help them recommit and sign a new lease with you:
Give them a discount in rent this year. $100 a month is cheaper than a turn. Do you really want to play “renter roulette” with an up-and-coming rental pool filled with bucket-3 type applicants after the eviction moratorium ends?
Offer to upgrade your home. I am putting new flooring in one of my homes. It’s a win-win, as my property value will increase and the tenants will love it. Consider new countertops, appliances, or landscaping as an incentive for them to stay.
Giving them a monthly gift card or buying them an annual pass to the local zoo or theme park might be a better option depending on the renter.
By helping this group, you only help yourself. They helped keep you afloat for a year…it’s time to say thank you!
Bucket 2: Manage
If you have been working with your tenants and have gotten partial payments here and there, then you are in bucket 2, the “manage” bucket. I don’t need to tell you, but you have been working hard, performing a high level of management just trying to get paid. The only reason you are managing like this is because the government forced you into it. If this moratorium ends in June, I suggest these as your next steps:
Sit down (face-to-face if possible) with your tenants and lay out your future expectations.
Let them know that the behaviors they have shown in the last year will not be acceptable in the future.
Contact your local government to see if there is any stimulus money to offset past-due rent.
Negotiate any past-due rent and then renew the lease with a new mindset. Get creative and say you will waive the past due if they sign a new lease with a small increase in rent. This will allow you to recoup your past-due rent over time and take the burden off your tenant.
As a landlord do you have a plan for when the eviction moratorium ends? Which of the three buckets are you in?
Bucket 3: Replace
If your tenant ignores you, won’t take your calls and refuses to pay rent because of a COVID-related reason, you, my friend, are drowning in bucket 3. We feel for you, as covering someone’s rent when they are not cooperating or communicating is not fun or easy. Cutting the cord and cutting it quickly may be your best decision. If you are in bucket 3, please consider these suggestions:
If you fail to receive any rental-assistance money, you should contact an attorney immediately. Some states have lengthy eviction processes and by starting the process today, you might be in a better situation come the end of June. Establishing and maintaining that relationship with legal counsel is well worth the money.
You could offer the tenant money to move if your property is given back to you in great shape. Once they are out and the property is inspected and meets your standards, you can send them their money.
As the world prepares to get back to normal, let’s make a commitment and not just return to our normal way of managing. This pandemic has afforded us the perfect opportunity to review and update our processes, policies, criteria, applications, and onboarding process. The key to your success in this world is finding and retaining the right tenants. In a time where It will only be harder and harder to find the right tenants, it is paramount to be ready to hold on to or grab the best of the best when the music finally stops.
About the author
David Pickron is president of Rent Perfect, a private investigator, and a fellow landlord who manages several short- and long-term rentals. Subscribe to his weekly Rent Perfect Podcast (available on YouTube, Spotify, and Apple Podcasts) to stay up to date on the latest industry news and for expert tips on how to manage your properties.
As we work through the pandemic, here are some lease renewals thoughts that could apply post-pandemic that landlords and property managers may want to consider going forward in 2021.
By Justin Becker
There is no doubt that COVID-19 has changed the way people occupy space and interact, which, as a result, has caused a decline in demand for space and property. The unprecedented crisis is expected to have lasting effects, depending on how long the virus persists.
In order to respond to the crisis, it is important that property managers and owners take action now rather than later. In the post-pandemic era, landlords should review some strategies regarding property leases.
COVID-19 has seen the closure of many retail locations, not just in the United States but across the globe. Since the duration of the pandemic is uncertain, landlords, tenants and lenders are all trying to figure out their next steps involving real estate inter-parties.
While the relationship between property owners and tenants depends on individual lease agreements , regarding leases to private and commercial properties, the post-pandemic era will require some changes that property owners can make to address the unique challenges brought about by COVID-19.
Below are some of the possible steps that property owners should consider during the post-COVID-19 period.
1. Rent Deferral
Considering rent deferral is one of the steps that landlords can take to address the challenges that most tenants, especially those occupying homes, apartments and townhomes for rent, are currently facing. The world has witnessed massive job losses, which means that people and businesses are facing financial difficulties.
An agreement to defer a portion, or the entirety, of the rent for a defined period of time would be most effective to address the situation. Deferred rent would then be paid after the agreed period lapses or over the duration of time, depending on how the situation resumes to normalcy.
Ideally, the issue of rent deferral is subject to several factors that guide the property owner’s decision to set the terms of such an agreement. For example, deferral on commercial property should be based on the tenant’s business operations.
There are certain businesses that are not self-sustaining, which means that there is no guarantee that you will be paid at the end of the deferral period. You need to set the terms in such a way that while the aim is to provide the tenant with financial relief, you are also able to maintain your cash flow under the lease.
2. Rent Reduction
Rent reduction might be perceived as unfavorable to landlords, but it works towards building a good relationship with the tenants. As a property owner or property manager, rent reduction should be one of the options, provided that it does not take place at the expense of the landlord’s cash flow.
Of course, rent-restructuring is more economically viable to the tenants, which is why many property owners would consider it as unfavorable to them. However, there is no actual telling how long the effects of COVID-19 will last.
This means that the financial burden on the tenants might extend for an unknown period. Considering rent reduction, no matter how unfavorable it might seem, is not entirely a bad option. An alternative to rent reduction to landlords is tolling the rent.
An agreement can simply be drafted detailing the abatement period that provides some rent relief to the tenant. However, property owners and managers should understand that rent abatement does not provide any relief on the part of the landlord in terms of cash flow, operating costs and other ongoing obligations.
The current economic hardships are already difficult for both landlords. property managers and tenants, hence the need to establish workable goals that are practical and discernible.
3. Setting Realistic Expectations
One thing that COVID-19 has taught the world is that you can never be too sure about the future. For this reason, it is important for parties involved in property leases to set out realistic goals that address the unique nature of the current situation that they find themselves in.
Going forward, it is expected that it will take some time before the situation resumes to normalcy, especially in terms of income challenges.
The current economic hardships are already difficult for both landlords and tenants, hence the need to establish workable goals that are practical and discernible. This way, you won’t lose your tenants as a property owner due to financial constraints, as the challenges being experienced are not permanent.
The mutually acceptable solutions, in the short term, should leave you in a better position post-COVID when the harsh economic times change for the better.
4. The Need For Lease Transparency
Transparency is one of the key things that will be needed in real-estate deals during the post COVID-19 era. While leases are meant to guarantee that transparency is upheld in rental agreements, there are instances where certain clauses are left out by the property owners only for the tenant to be subjected to these clauses after signing the lease renewal agreement.
Tenants also have a tendency of leaving out crucial information that can affect the tenancy agreement in the long run.
It is such disputes that tend to escalate, especially when one party involved in the lease feels aggrieved. To avoid such disputes, full disclosure is important, especially on the parts of the tenants that are struggling with financial difficulties. Of course COVID-19 has affected property owners and their tenants alike. This is an issue that landlords understand too well.
In the event that the lease renewal can be altered to factor in emerging issues brought about by the pandemic, then such an eventuality would work to the benefit of the parties involved. Non-disclosure on either of the parties only causes unnecessary disputes that can easily be solved through consensus.
5. Consider Third-Party-Lender Approvals
With the demand for apartments and mobile homes for lease constantly changing, it is important that you consider third-party lenders as part of your plan to maintain a steady cash flow. With tenants yet to recover financially, post-COVID will require that you consider getting funds from alternative lenders to stay afloat.
For property owners and managers, such real estate requires a lot of maintenance. Even if the demand for apartments has been on the decline, the tenants residing there require basic services and repairs, in case of damage to the property. As outlined in most leases, it is the responsibility of the tenant to cover damages to the property they are residing in.
With that said, there are unique situations where the damage may be as a result of other causes other than the tenant. This means that the tenant cannot be charged for such damages. Availability of funds ensures that possible repairs are done fast, meaning the tenant is not affected in any way that would be in violation of the tenancy agreement.
6. What To Expect Post-COVID In The Real Estate Market
The current crisis has led to significant stress on both landlords and their tenants. Both parties have experienced a decline in cash flow, business interruption and overall suspension to some. To address the unprecedented challenges brought about by COVID-19, landlord-tenant agreements should be mutually beneficial. Landlords can offer some waivers, but tenants too should strive to fulfil their rent obligations.
This calls for a change in the way property owners and tenants interact post-COVID. With competent planning, the situation is likely to change sooner than expected. This means that every decision has to be accompanied by a shared goal between landlords and tenants.
Future leases and lease renewals post-pandemic will need to factor in the need to have a plan regarding how both parties intend to address these types of issues. However, there is every need to be prudent regarding how the issues brought by COVID-19 are leveraged to address the current crisis.
The post-COVID era promises a lot of uncertainties to both landlords and tenants. With that said, it is better to deal with the crisis now through the strategies outlined above before focusing towards the future. This is how property owners can address the current crisis and also ensure that they do not lose their tenants.
About the author:
Justin Becker is a property owner in the state of Michigan and has a passion for managing communities. He owns apartment complexes and mobile home communities, and has been writing his own blogs for his properties for several years.
A landlord asks this week about an emotional support dog and a tenant who has passed away, so that is the question for Ask Landlord Hank. Remember Hank is not an attorney and he is not offering legal advice.
Dear Landlord Hank:
A couple moved in 18 months ago. The husband had an emotional-support animal.
However, the husband has now died. Does the emotional support dog now become a pet? I don’t rent to people who have dogs. May I require the wife to get rid of the dog? May I now charge a pet fee? May I raise the rent? — Jerald
Hi, Landlord Jerald,
An emotional-support animal is meant to help a person who is disabled. The pet is meant to help the disability that affects a major life function for that person.
If that person is no longer alive, then the emotional support animal is not doing the job for which it was designed, and it becomes a pet.
In my opinion, you could require the wife to sign a pet addendum, and collect a pet deposit.
BUT, is that really the right decision?
Maybe from a strictly business sense, yes. But ask yourself these questions:
First, have these tenants been good tenants?
Has the emotional support dog been a problem, or caused any damage?
Would anything really change if you allow this grieving wife to stay until the end of her lease, with no changes?
I normally don’t allow pets in my properties either, but in this case, if they’ve been good tenants and there is no damage to the property from the pet, I’d let her stay through the end of current lease, but no longer.
I’d have a conversation with her though, so she knows you are making an accommodation for her, but only for this one lease.
Sincerely,
Hank Rossi
Landlord Hank says, “If that person is no longer alive, then the emotional support animal is not doing the job for which it was designed, and it becomes a pet.”
Ask Landlord Hank Your Question
Ask veteran landlord and property manager Hank Rossi your questions from tenant screening to leases to pets and more! He provides answers each week to landlords.
The Grace Hill training tip of the week focuses on the issue of documentation to help property management professionals if HUD calls and to defend themselves in the event of a Fair Housing Act discrimination charge.
Two years ago, the U.S. Department of Housing and Urban Development (HUD) awarded $37 million to more than 150 national and local organizations working to confront Fair Housing Act violations.
The enforcement will come through testing, filing fair housing complaints, and investigations by these organizations.
In order to successfully defend your decisions, policies, and practices, as well as demonstrate that all persons were treated the same, your documentation must be complete and contain relevant facts. This seems like a good time to talk about documentation.
If HUD calls, do you have documentation to defend yourself?
Documentation is extremely important if you find yourself dealing with an accusation of discrimination. You must be able to defend your decisions, policies, and practices, as well as demonstrate that all persons were treated the same, regardless of membership in one of the protected classes.
Accordingly, your documentation should offer a full accounting of facts. Describe all events and actions taken, all people involved, and provide specific dates and times.
Your documentation will not be effective if you do not keep the supporting paperwork: copies of service requests, guest cards, and availability reports. These records will be used to verify the dates and times of customer requests, availability changes, and rental rate changes.
When it comes to documentation, keep your records complete, organized, and on file for three to five years.
Tips for good documentation and record-keeping strategies
Use guest cards for consistent documentation on all prospective residents who call or visit.
Document all follow-up activity on the guest card.
Follow up both verbally and in writing with anyone whose rental application is declined.
Keep an organized file of your apartment availability reports.
Document the dates and times of any rental rate changes.
Keep all service requests on file. Be sure the work done, time completed, and technician’s name are noted on the request.
Keep important documentation, including guest cards, declined applications, availability reports, dates and times of rental rate changes, and all service requests on file for at least three years, though preferably for five years.
Why keep records for three to five years?
It is becoming more common for unsuccessful HUD complaints to be filed as lawsuits.
In this case, the complainant has two years from the time the discriminatory housing practice ended or occurred to file a lawsuit.
However, the two years does not include any time in which administrative proceedings from the original HUD complaint were pending.
Also, if a conciliation agreement was reached between the two parties in a HUD discrimination claim, and the accused party violates the agreement, the complainant has two years from the time the agreement is violated to file a lawsuit.
So, long story short, proceedings related to a complaint could go on for a very long time!
Private organizations play a key role in enforcing fair housing laws, and that they are being provided with ammunition from the government to step up enforcement.
Of course, it is best to do all you can to prevent claims in the first place. But if it happens, good documentation can help make the process go as smoothly as possible.
Ellen Clark is the Director of Assessment at Grace Hill. Her work has spanned the entire learner lifecycle, from elementary school through professional education. She spent over 10 years working with K12 Inc.’s network of online charter schools – measuring learning, developing learning improvement plans using evidence-based strategies, and conducting learning studies. Later, at Kaplan Inc., she worked in the vocational education and job training divisions, improving online, blended and face-to-face training programs, and working directly with business leadership and trainers to improve learner outcomes and job performance. Ellen lives and works in Maryland, where she was born and raised.
About Grace Hill
For nearly two decades, Grace Hill has been developing best-in-class online training courseware and administration solely for the Property Management Industry, designed to help people, teams and companies improve performance and reduce risk.
The Grace Hill training tip of the week focuses on the issue of how your terms, conditions or privileges you provide prospective tenants and existing tenants could be discrimination under the Fair Housing Act.
You must treat all prospects and tenants in a consistent way in how you use terms, conditions or privileges to avoid discrimination under the Fair Housing Act.
Setting different terms, conditions, or privileges for buying or renting housing is a little less direct than other illegal practices, such as an outright refusal to rent or sell to an individual.
But it is just as illegal.
Requiring higher security deposits from families with children and demanding higher application fees from minorities are examples of discrimination in terms, conditions, or privileges. These practices violate fair housing laws.
To avoid discrimination in terms, conditions or privileges, treat all prospects and residents fairly and consistently.
3 ways in leasing to be consistent and avoid discrimination
If you require a photo ID from prospects to tour your community, be sure to get one from every prospect. No matter how non-threatening someone appears, it is important to require the same thing from all prospects.
If a prospect’s rental application is denied, follow-up with them both verbally and in writing. Follow this exact procedure for every application that is denied.
If you have a prospect who does not meet your income requirements but you let her sign a lease by pre-paying six months’ rent, you should offer this option to other prospects in a similar situation.
3 ways in maintenance to be consistent and avoid discrimination
If you charge one resident for a lock change, you should charge all residents the same amount for the same service.
Respond to service requests in the order in which they were received.
Faster response to emergencies is expected, but be sure to clearly define and document what constitutes an emergency service request. Document all correspondence with residents in your records.
If you make an exception to any policy or procedure, make sure you provide the same information and options to all prospects and residents who are in the same situation.
Being consistent in how you apply policies and procedures will help you make a habit of treating all current and future residents fairly and equally. This will help you comply with the FHA, but just as importantly, it will create a more welcoming atmosphere for all people who meet your qualifications and wish to live in your community.
Summary on consistency and discrimination
The Fair Housing Act is intended to prevent housing discrimination.
The Fair Housing Act describes a number of illegal practices relating to housing discrimination. One of these is discrimination in terms, conditions, or privileges.
Discrimination is when a person, or a group, is treated unfairly or differently than others for a reason related to their membership in a certain category or group. In other words, if someone is treated in a different way than someone else because of the color of their skin, their age, their nationality, their ability to speak English (to name just a few) they are being discriminated against.
A person does not need to be harmed to have been discriminated against—just treated differently.
Ellen Clark is the Director of Assessment at Grace Hill. Her work has spanned the entire learner lifecycle, from elementary school through professional education. She spent over 10 years working with K12 Inc.’s network of online charter schools – measuring learning, developing learning improvement plans using evidence-based strategies, and conducting learning studies. Later, at Kaplan Inc., she worked in the vocational education and job training divisions, improving online, blended and face-to-face training programs, and working directly with business leadership and trainers to improve learner outcomes and job performance. Ellen lives and works in Maryland, where she was born and raised.
About Grace Hill
For nearly two decades, Grace Hill has been developing best-in-class online training courseware and administration solely for the Property Management Industry, designed to help people, teams and companies improve performance and reduce risk.
