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Here are answers to some of the most frequently asked questions Just because a real estate transaction doesn’t involve the sale of property doesn’t make it hassle-free. Property-management issues, whether involving the manager, the owner, the tenant, or any combination of the three, pop up frequently. The following questions are typical questions that property managers receive from owners, tenants, or other brokers.
After the initial lease term ends, may the landlord insist that the tenant sign an extension, or may the tenant insist on a "month-to-month" tenancy? Under the Time Residential lease, the lease automatically converts to a month-to-month tenancy unless either party gives prior notice of termination (30 days or more). Before the original term ends, the landlord may notify the tenant that the parties must either execute a renewal or the landlord will terminate. While the landlord cannot compel the tenant to accept an extension or renewal agreement, the landlord may terminate the lease with proper notice if the tenant refuses to enter into an extension or renewal.
When the lease ended, the tenant gave the landlord a forwarding address but returned only one of three keys that were provided to him. Has the tenant fulfilled his obligations? The tenant is required to return all access devices (keys) to the landlord when he surrenders the property. He is also required to give the landlord a forwarding address. If the tenant fails to deliver all the keys to the landlord but has clearly surrendered the property to the landlord, the landlord may deduct the cost of unreturned or lost keys from the security deposit. The landlord should provide the tenant with a written accounting of the security deposit not later than the 45th day after the tenant surrenders the property and gives the landlord notice of the tenant’s forwarding address.
What is the tenant liable for under a lease if he does not pay the rent or moves out early?
A landlord is required to mitigate his damages by exercising reasonable efforts to lease the property to another tenant. For example, assume a tenant breached a lease six months into a one-year lease with a $1,000 monthly rent payment. The landlord has potentially lost $6,000 in rent over the remaining term. If the landlord is able to lease the property to another tenant in two months, the landlord has lost two months of rent, or $2,000. The landlord is also entitled to recover any costs associated with re-leasing the property (for example, brokerage fees). Assuming that it cost the landlord $500 to re-lease the property and there was no damage to the property, the damages in this example are $2,500.
Why do I have to supply my social security number and driver’s license on the application? The landlord will typically require a credit check or a criminal-background check or both. This type of information cannot be accurately obtained without the applicant’s social security number and driver’s license. It may be necessary for the credit-reporting agency to distinguish between people with similar names and aliases.
I gave my landlord proper notice that I will move out. I suggested that in lieu of paying the last month’s rent, the landlord apply the security deposit to the last month’s rent. May the landlord refuse? Yes. Paragraph 7 of the Time Residential lease agreement provides that the tenant may not withhold the last month’s rent on grounds that the security deposit is payment for the last month’s rent. The security deposit is security for the tenant’s performance under the lease, including the tenant’s obligation to return the property without damage (excluding normal wear and tear).
I tendered a rent check to the landlord on time. The check bounced. At my request, the landlord resubmitted the check. I made sure that there were sufficient funds. The landlord now demands that I pay $50 for the bounced check–which I understand–and the late charges. May he charge me for the late charges? Yes. A check that is returned for insufficient funds is the same as if the money had not been tendered. Until "good funds" are tendered, the rent remains unpaid. The fee for the bounced check is charged for the administrative costs associated with a bounced check. The late fees apply because rent was not timely paid.
Why am I charged for repairs? It is not my disposal or window that broke? The Time Residential lease addresses which party will pay for the various repairs. If a tenant causes a condition that needs repair, the tenant will bear the cost of repair. Likewise, if the landlord causes the condition, the landlord will bear the cost. If a condition affects the health and safety of an ordinary tenant, the landlord must bear the cost of repair. The only exceptions are: if the tenant caused the condition; if the condition is a wastewater damage caused by improper objects in the lines; if the damage is to doors, windows, or screens; or if the damage is caused by windows or doors left open. If neither of the two preceding paragraphs applies to the specific repair in question, then the provisions of the lease control which party bears the cost. Under the Time residential lease, the landlord will pay for all repairs not specifically addressed above, but the tenant may have to pay a portion of the cost if this requirement is specified in the lease. Furthermore, the lease may specify certain items that the parties agree will not be repaired if those items malfunction (such items are typically personal property such as refrigerators, washers, dryers, or microwaves).
The management agreement ended and there was a tenant in the property. How should the property manager, who is holding the security deposit, handle the security deposit? Most management agreements address this issue specifically. Under the Time Residential property management agreement, the manager may, before releasing the security deposit to the owner, require evidence from the owner that the owner gave the tenant a statement acknowledging that the owner is responsible for the security deposit. It is probably best for the manager to call this provision to the owner’s attention and report to the owner that the manager stands ready to forward the security deposit to the owner upon receipt of the evidence. If the owner refuses to provide a statement to the tenant about the security deposit and insists that the manager give him the security deposit, the manager should seek the assistance of counsel. There are several alternatives that may be available.
For example, the manager may: insist on the owner’s compliance with the property management agreement and interplead the security deposit into a court or ask for injunctive relief (which means asking a court to resolve the issue); or forward the security deposit to the owner and provide written notice to the tenant that the manager has sent the security deposit to the owner and that the owner is now responsible for the return of the security deposit.
I normally negotiate sales of residential properties. Occasionally, I negotiate leases. May I use the same lead-based paint form in lease transactions that I use in sales? No. There is a separate lead-based paint addendum for use in residential leases. While the two forms are similar, federal regulations require a separate notice for leases.
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