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Judge strikes down landlord’s extra apartment fees

gavel

From the Herald:

A federal judge this week dealt a blow to apartment giant Equity Residential, saying the upfront, nonrefundable fees it has charged Massachusetts tenants — including “amenity,” “move-in,” application and pet fees — are illegal because they violate the state’s security deposit law.

“The judge found … the security deposit statute limits to certain enumerated charges what the landlord can charge (before or) at the commencement of the tenancy, and those are first month’s rent, last month’s rent, a security deposit and a charge for a lock and key installation,” said David Pastor, a Boston attorney representing three former Equity tenants.

Remember: Know your rights.

Legal rights of Boston renters: The most landlord’s can charge renters

As we approach the big Boston September apartment rental move-in’s, here are a few items both tenants and landlord’s should know:

The most a landlord can charge you when you first move into an apartment is:
•First month’s rent;
•Last month’s rent payment;
•A security deposit; and
•The cost of a new lock and key.

The last month’s rent and security deposit each can be no more than the first month’s rent. For example, if your first month’s rent is $1,000, a landlord can charge you $3,000 ($1,000 for the first month’s rent, $1000 for a security deposit, and $1,000 for a last month’s rent payment), plus the cost of a new lock and key.

Differences Between a Security Deposit and a Last Month’s Rent Payment

A security deposit and a last month’s rent payment are not the same thing. A security deposit is money that you pay and expect to get back after you move out. The purpose of this money is to protect the landlord in case you damage the apartment or leave owing rent. In the eyes of the law, a security deposit is your money. For this reason a landlord must keep it in a bank account separate from the landlord’s money (and safe in case he goes bankrupt or gets foreclosed on) and must pay you interest every year. When you move out, you do not automatically have the right to withhold your last month’s rent simply because the landlord holds a security deposit.

The purpose of a last month’s rent payment is to protect a landlord against a tenant’s leaving without paying the last month’s rent. When you pay last month’s rent in advance, you should not expect to get this money back when you move out. Instead, it will pay for your last month in an apartment. Also, a landlord does not have to put your last month’s rent money in a separate bank account while she holds onto it. She does, however, have to pay you interest on it every year.

Illegal Practices

Illegal Fees

Massachusetts law clearly states that before you move in, a landlord can charge you only first month’s rent, a last month’s rent payment, a security deposit, and the cost of a new lock and key. Often, landlords try to impose extra charges on tenants. They may call these “holding deposits,” “pet fees,” “fees for credit checks,” “cleaning fees,” or “application fees.” These extra fees are illegal.

A separate broker, independent from the landlord, may, however, also charge a “finder’s fee” or “broker’s fee.” A landlord cannot try to escape the requirements of the security deposit law by taking what is really a security deposit and calling it a “cleaning fee” or something else.This is also illegal.

The problem is that if a landlord demands these illegal charges and you either accuse the landlord of violating the law or refuse to pay, the landlord may not rent you the apartment. If you want the apartment and can afford to pay the extra fees, get a detailed receipt for whatever you pay and then take the extra fees out of your future rent after you safely move in. When you do this, write the landlord a letter telling her what you are doing and why.

Source: Mass Legal Help

Legal rights of Boston renters: The most landlords can charge renters

As we approach the big Boston September apartment rental move-in’s, here are a few items both tenants and landlords should know:

The most a landlord can charge you when you first move into an apartment is:
•First month’s rent;
•Last month’s rent payment;
•A security deposit; and
•The cost of a new lock and key.

The last month’s rent and security deposit each can be no more than the first month’s rent. For example, if your first month’s rent is $1,000, a landlord can charge you $3,000 ($1,000 for the first month’s rent, $1000 for a security deposit, and $1,000 for a last month’s rent payment), plus the cost of a new lock and key.

Differences Between a Security Deposit and a Last Month’s Rent Payment

A security deposit and a last month’s rent payment are not the same thing. A security deposit is money that you pay and expect to get back after you move out. The purpose of this money is to protect the landlord in case you damage the apartment or leave owing rent. In the eyes of the law, a security deposit is your money. For this reason a landlord must keep it in a bank account separate from the landlord’s money (and in case he goes bankrupt or gets foreclosed on) and must pay you interest every year. When you move out, you do not automatically have the right to withhold your last month’s rent simply because the landlord holds a security deposit.

The purpose of a last month’s rent payment is to protect a landlord against a tenant’s leaving without paying the last month’s rent. When you pay last month’s rent in advance, you should not expect to get this money back when you move out. Instead, it will pay for your last month in an apartment. Also, a landlord does not have to put your last month’s rent money in a separate bank account while she holds onto it. She does, however, have to pay you interest on it every year.

Illegal Practices

Illegal Fees

Often, landlords try to impose extra charges on tenants. They may call these “holding deposits,” “pet fees,” “fees for credit checks,” “cleaning fees,” or “application fees.” These extra fees are illegal.

A separate broker, independent from the landlord, may, however, also charge a “finder’s fee” or “broker’s fee.” A landlord cannot try to escape the requirements of the security deposit law by taking what is really a security deposit and calling it a “cleaning fee” or something else. This is also illegal.

The problem is that if a landlord demands these illegal charges and you either accuse the landlord of violating the law or refuse to pay, the landlord may not rent you the apartment. If you want the apartment and can afford to pay the extra fees, get a detailed receipt for whatever you pay and then take the extra fees out of your future rent after you safely move in. When you do this, write the landlord a letter telling her what you are doing and why.

Source: Mass Legal Help

Boston rents are starting to fall as new inventory comes on line

Boston condos for rent

Boston condos for rent

The BBJ, citing a report from CoStar that we can’t find, has some big and fascinating news: Rents in Boston are starting to fall as new housing comes on line, such as the Kensington, Avalon-Exeter, the Victor and Waterside Place.

In the first quarter, rents were down 9 percent in the Back Bay and South End, while rents in the downtown and Chinatown were off 5 percent. Rents in Seaport were down just under 3 percent, according to the Costar data cited by the BBJ.

Sorry to harp on this. But these stats just go to show that more housing equals more competition which equals good news (or at least slightly better news) for renters.

Yeah, these are mostly luxury apartments that the average person can’t afford. But just think if they started building more housing in the outer neighborhoods. In addition, the new luxury apartments mean fewer people hunting for existing rental units.

File under: Encouraging news

Sketch above is of Waterside Place.

‘Friendly competition’ keeps Seaport rents as high as possible

Boston Condos

Boston Condos

We had to blink a few times when we read this article in which representatives of major new Seaport apartment towers openly talk about how they’re trying to cooperatively keep rents as high as possible. From the article:

Every week the property managers of the big new Hub apartment complexes share information on leases signed, concessions and occupancy rates.

“We have a rule that we never run down our competition,” said Jackie Chancholo, Waterside’s property manager, who works for the Bozzuto Group, which manages the Park Lane Seaport across the street (where she previously worked), Kensington and other competing properties. “You want to build relationships so that people from other buildings share information with you, which is in everyone’s best interest. We keep it a friendly competition.”

We guess there’s nothing wrong here per se. It’s done all the time. But what’s not done is it being openly discussed in public and in the media.

File under: Competition Friendly competition

Design sketch above is of Waterside Place, which is mentioned in the story.

P.S. — Sooner or later, the dam is probably going to break on apartment builders, friendly competition or not.

Boston’s glut of new luxury apartments may bring down rents – and banks with them

Boston condo apartment rentals

Boston condo apartment rentals

The numbers are somewhat staggering: 9,800 new apartments are slated to come on line in Boston in coming years – 887 units did so last year, 1,600 will come on line this year, and the rest will follow soon after.

It’s all very welcome. The city – and state – desperately needs new housing.

But that leaves a big: What if there isn’t enough demand for all of these luxury units? What will happen if the market can’t absorb them?

The BBJ’s front-page story today addresses this issue:

(As) high-end developers continue to add inventory to the market, there’s some skepticism among real estate insiders that there won’t be enough demand for all these units. While optimistic developers point to promising demographic trends, others question the city’s capacity to fill the slew of luxury units that will soon flood the market. If the skeptics are right, it won’t be the first time Boston overbuilt one property type. As Harold Brown, the octogenarian developer and landlord, puts it: “The glut will bring rents down, and some developers and banks will lose money.”

If rents fall and some banks lose money, our response would be this: That’s the free market, folks. And that too would be welcome.

And then maybe developers will start doing two other things: 1.) Building more condos (as opposed to apartments) and 2.) Building more affordable housing, a huge niche where demand will remain high for years to come.

There’s an outside chance that the negative effects of overbuilding could lead to more cautiousness on the part of developers and banks. But that’s the free market too, though we suspect developers and lenders simply wouldn’t fold up and go away.

They’d try to find new niches – and that gets back to more condos and affordable housing.

Boston’s apartment rental blues

Here’s a terrific look at the growing gap between the asking prices for apartment rentals in Boston versus asking prices across the rest of the nation.

In 2008, Downtown Boston’s average monthly asking rent was $2,637, roughly 150 percent higher than the average national asking price of $1,050. In 2012, Downtown Boston’s average monthly asking rent of $2,861 was roughly 160 percent higher than the national average, according to the BBJ.

In other words: The gap is growing.

Ok, you might be thinking: You’re comparing a downtown city market with the entire sum total of the US.

Sure, the difference between metropolitan Greater Boston’s asking prices is indeed not as great, but the difference is still huge and the gap is still growing.

In 2008, Greater Boston’s average asking price for an apartment was $1,740, nearly 65.7 percent higher than the national average. In 2012, the gap between Greater Boston and the nation was 66.3 percent, according to BBJ data.

There are two ways to look at this trend of rising rents and growing gaps: 1.) It’s a sign of a healthy apartment market and local economy. 2.) It’s those two things, but also it’s a sign that tenants are paying more out of their paychecks for apartments and that makes Massachusetts a less desirable and competitive place in the medium- and long-term when attracting and keeping employees.

Bottom line: It’s a great article by the BBJ (sub. required).

File under: More housing construction, of any type, please

‘Boston rents soaring’

Don’t look now, but Boston-area rents are really shooting up. The reason is simple: Too much demand, too little supply.

The market could get more tight and expensive later this year if the local economy keeps improving. Not that we’re complaining about the latter. The area needs jobs. But they’ll come at a cost — of course.

Boston’s building boom for apartments

The Globe impressively adds up all the recent construction projects announced or under way in Boston, and concludes we’re seeing an apartment construction boom.

The numbers back up the claim: 850 units now under construction. Another 295 as of Monday when developers start yet another project. Those numbers don’t include the approximate 1,000 housing units, mostly apartments, that were under way before this fall season.

The main driver of the trend: a 4.2 percent apartment vacancy rate in the city and among the highest rents in the country.

This is all great for the city, renters and the hard-hit construction industry in particular.

File under: Build, and They Will Come