SMARTERLANDLORDING

ADVICE FROM EXPERIENCE

Dealing With Tenants

The Fire Clause

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On the latest episode of the Smarter Landlording Podcast, my guest Bucky Philip and I discussed clauses that were required in residential leases here in Tennessee.  One of those clauses is a statement demonstrating that you as the landlord are not responsible for the tenant’s personal items in case of a fire, break in or some other emergency.  I call it the fire clause.

We have such a clause in our lease.  In fact, we go one step further.  We highly recommend that tenant’s get their own renter’s insurance and then have then initial next to the clause.  That way if there is ever a problem in the future (let’s hope there is not), the tenant cannot claim they were not informed.

Here is the fire clause we use in our lease.  Feel free to modify to fit your needs.

Tenant’s Personal Property: Manager shall not be responsible for loss of, theft, or damage to, Tenant’s personal property.  Manager shall not provide fire and casualty insurance for Tenant’s personal property. IT IS THE TENANT’S RESPONSIBILITY TO OBTAIN RENTER’S INSURANCE.     

         I/we understand the rental insurance policy:___________ Tenants Initials.

Check out the Smarter Landlording Podcast with Bucky for other information you need to know. 

Also stay tuned for the next episode coming up in a few weeks.

If They Legalize It Do I Have To Allow It?

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Social norms regarding the use of marijuana are rapidly changing.  Legalization would have been considered impossible just a few years ago, but it is now occurring to varying degrees all over the country.  To us landlords it brings up an interesting question; if pot is legalized do we have to allow people to use it in our properties?

The answer to that is no.

There are lots of things that are legal to do and or own that we do not have to allow, such as tobacco, pets even waterbeds.  Marijuana, if legalized, would fall into this same type category.

Why is that?

For one thing marijuana is still illegal on the federal level.  Until that gets resolved there are still legal implications.

Secondly, our property is just that, our property.  It is private and we can regulate, within certain limits, what we as private property owners will allow on our properties.

Thirdly, marijuana users are not a protected class.  Nor are tobacco smokers or users of alcohol.  Many a landlord, including yours truly, has banned tobacco use in our properties and we could ban alcohol use as well if we wanted to.

Remember, you as a landlord are not allowed to discriminate against who you allow to live in your properties based upon the seven federally protected classes.  Those classes are age, sex, race, color, religion, national origin and familial status.  But you can and are even encouraged to discriminate in other ways.  Everything else, such as marijuana smokers, tobacco users, motorcycle owners, truck drivers, lawyers and deadbeats is fair game.  You just have to be consistent in your application of those discriminating standards.  Meaning if you discriminate and say no once, you better say no all the time, every time.

But who knows.  As laws and norms continue to change, it may be advantageous and profitable to some landlords to allow marijuana use on their properties.  For other landlords, it will be not so much.  That however is the beauty of the free enterprise system.   There will likely be something for everyone, tokers and non-tokers alike.

No Candles Allowed

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This is why there are no candles allowed in our apartments.

“An apartment tenant told firefighters that he was burning candles in his bedroom and then went to another area of his apartment. The candle was sitting on a table and caught nearby combustibles on fire.

The estimated damage to the building is about $75,000, according to the battalion chief.”

We place the restriction in our “House Rules” which is attached to, and thus a part of, the lease.

Yeah, I know, it can be hard to police but we have to try to protect our property and tenants.

 

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Another Handy Lease Clause

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Ever have a tenant think their security deposit equals their last monthly rental payment?

We have.

We put a stop to it with this clause in our lease.

“It is understood that the security deposit is NOT an advance payment of monthly rent.  If Tenant tries to use security deposit as last months rent, an eviction will be immediately filed.”

This simple clause seems to work well for us. 

Use it in your lease today!

Want to learn more about what needs to be in your lease?  Stay tuned for Episode 3 of the Smarterlandlording Podcast.  Coming soon!

A Simple Lease Clause To Help You Get Properties Rented

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When we receive notice that a tenant is moving out, our goal becomes getting that property re-rented as quickly as possible.  After all, no tenant means no cashflow.

Our lease requires our tenants provide us with at least a month’s notice of their intent to move.  Most have been very good with that request, giving us plenty of time to market the property and hopefully get it re-rented.  Of course re-renting the property means showings.  After all, how many people do you know that will rent a property sight unseen? 

Showing the property can cause some difficulty.  Your tenant still has possession.  It is their home.  They do not have to let you in to show the property.  They could potentially make you wait until they have fully moved out.

How do we handle this?  As simply as possible.

We have the following clause in our lease which the tenant reviews and signs upon move in.

            “Tenant will allow Manager access to show their apartment with 24 hours notice.”

Problem solved.

Whenever a prospective tenant lets us know they wish to see the apartment, we let them know that we have to give 24 hours notice and that we will get back with them to set up a time.  After contacting the current tenant and providing the notice, we then set up a time to show the property.

This process may seem a bit cumbersome, but it really is for the best.  It protects everyone’s rights and generally leaves everyone happy.

Most of our tenants understand the need to re-rent the property and really appreciate the notice.  Yes, there are a few that grumble every once in a while but we just remind them of the clause in their lease.

Remember your tenants have possession until they move out.   Use this simple clause in your lease to avoid any problems and help you get your units re-rented as soon as possible

What To Do With A Financially Struggling Tenant

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Have you noticed the rising prices lately?  I have.  Gas, food, just about everything seems to be getting more and more expensive.  Rents have been following this trend, and while that may be good for us landlords, it is not so good for many tenants out there.

I have a feeling many tenants are getting squeezed more and more.  Not only do they have to pay increased costs for housing, food and fuel, think about those student loans and other debt burdens many of them have.  While we can debate the causes and solutions to all of these issues, the fact remains than a lot of people are living paycheck to paycheck and barely scraping by.

Tenants can therefore find themselves between a rock and a hard place.  Their paychecks are just not going as far as they used to and this past winter was brutally cold in many areas causing higher utility bills.  One step back, say a broken down car or an illness which causes lost work, can cause tenants to have to make tough choices.  Should they fix the car, keep the heat on or pay the rent?

Let’s be honest here about this situation, paying the rent is likely to be dropped down the list after getting the car fixed and keeping the heat on.  On the one hand they have to get to work to earn the money to pay the bills so the car will get fixed first.  On the other hand you as the landlord also have bills to pay.  There is nothing I can say to the bank for example that will allow me to delay my mortgage payment.  So what should you do with a financially struggling tenant?

To answer that question, we have to back up a bit first.  We have to go back to your lease signing and move in process.  Hopefully at that time you set up a decent landlord/tenant relationship.  You were firm but fair in noting when the rent is due and what the consequences would be regarding missed or late payments.  Hopefully you also encouraged your tenants to discuss any future concerns or issues with you.  You told them not to stick their head in the sand if they ran into trouble, but to communicate with you about the situation.

So let’s assume they are communicating with you, then what?

Be Nice – Being a jerk is not going to help the situation.  Your goal is to ultimately get what is owed in the easiest way possible.  It is much easier to do that at this point with kindness and understanding.  You can reiterate your policies and concerns, but do it in a non-confrontational manner.

Determine the Nature of The Problem – Is the problem a onetime occurrence?  Will the tenant be able to catch up rather quickly?  Or have they lost their job with no immediate prospects.  The nature of the problem should determine your next steps.

Move Quickly and Decisively – Once the nature of the problem has been determined, you need to move quickly to resolve it.  If you think the tenant can get things worked out, perhaps setting up a payment plan is the way to go.  At least get a verbal commitment, better yet get it in writing through an e-mail.  Hopefully the issue is now resolved.

Move the Tenant Towards Action – If it appears the tenant is in a bad position with no end in sight; your best bet is to begin to cut your losses.  After all, you are not going to get blood from a stone so to speak.  Discuss with the tenant how they are going to resolve the situation.  Ask the tenant if they have somewhere else to go.  Ask if they can get a loan from their parents, friends or church.  The point here is to get them thinking of alternatives with the understanding that they are not going to be allowed to stay without paying rent.

Let Them Go – If their situation is truly bad, your chance of getting paid is tiny.  If the tenant can quickly find someplace to go, let them out of the lease.  Again your goal now is to cut your losses and get you property back and cash flowing again as quickly as possible

If They Will Not Leave – Perhaps offering some cash for keys will be the motivation they need.  Many times these folks are simply out of cash and cannot even afford a moving truck.  Why not rent the truck for them?  Why not give them a couple of hundred bucks to go?  It is much cheaper than going to court and much less adversarial as well.  If they take your offer, be sure to get a signed release to the rights of possession.

Still Won’t Go? Then Set a Deadline – Sometimes no matter what you do, the tenant will just stay in denial and decide not to decide.  This tenant will need the ultimate push, a firm deadline after which you will file for eviction.  Sometimes, the tenant will leave right before or after the eviction is filed.

If You Have To, Evict – I hate to do it.  It is an absolute last resort for me as it is expensive, messy and confrontational.  But sometimes there is just no other way.  However, we have rarely had to use this route, as the steps I have outlined above will usually resolve things.

Unless there is a drastic change in the economy in the near future, I expect everyone to keep getting squeezed more and more (including me).  I would bet therefore that dealing with financially struggling tenants is going to become a bigger part of the landlording business.

My Tenant Called The Cops On Me

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Landlords often hold the mistaken notion that they are the “lords” of their properties.  In many ways they are the lord, but in some very fundamental ways they are not.   Once a lease is signed with a tenant they gain certain rights and acting like a lord may just get the cops called on you.

Here is why.

Your lease grants the tenant legal possession of your property.  Your property is now their home and their home is their castle so to speak.   So just like a homeowner, a tenant has rights in their home.  They have the right to be secure and to privacy for example.  They have a right to their possessions and they can expect that you as the landlord will keep the property safe and habitable.

What does this mean for landlords?

It means that you cannot just go in a tenant’s apartment at any time.  If you do, a tenant can call the cops and potentially have you arrested for trespassing.  Smarter landlords always try to give their tenants at least 24 hours notice before entering.  Most tenants will understand that you need to do routine maintenance and checkups and will have no problem allowing you in with proper notice.  But they may get really angry if they come home and just happen to find you there.  Of course if there is an emergency such as gushing water, a landlord is permitted emergency access to prevent property damage.  Otherwise, respect your tenant’s home and give proper notice.

A landlord also cannot deny access without going through proper legal procedure.  Remember, the tenant has legal possession.  Do not lock them out for any reason, even non-payment of rent.  Every state has a procedure in place to regain possession of the property.  It is called eviction.  If you do not follow this process, it is you that may end up on the wrong side of the law.

As a landlord, you can’t just remove their belongings either.  Even if you think they have abandoned the place and moved somewhere else, there is usually a legal procedure in place regarding a tenant’s possessions.  Here in Tennessee for example, If you suspect a tenant has abandoned the property, landlords have to wait and give notice before they can remove the tenants stuff. Then the stuff has to be stored for another thirty days.  Removing anything belonging to a tenant before you gain legal possession of the property can get you caught up in a nasty lawsuit or even arrested for theft.

Finally, don’t think turning off the utilities will solve your troublesome tenant problem.  You as a landlord have a legal duty to keep the property in a habitable condition, and a lack of utilities is generally going to be deemed inhabitable by legal community.  Will the cops arrest you for this?  Not likely.  But they will institute further legal actions by getting code enforcement involved.

Remember, your tenants have rights.  You as a landlord need to know what those rights are and respect them.  If you fail to do so, your tenant may call the cops and you may find yourself on the wrong side of the law.

 

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Perhaps Not The Best Way To Collect Rent

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Trying to collect rent with a chainsaw is not going to end up well for someone.  Landlords, don’t do this.  Not even for $17,900.

Don’t Spy On Your Tenants

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Landlords – if you put hidden cameras all over a tenant’s apartment like this guy did, you are going to go to jail.  Don’t be that guy and respect your tenant’s privacy.

I’ll Write My Own Rent Check

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From my tenant’s account.

This is not how you should collect back rent!

“Newport Police charged a 35-year-old Newport woman and landlord with felony breaking and entering, forgery and receiving stolen goods for allegedly writing herself checks from a tenant’s account.”

You can read the rest here.