Rent it Right

Janet Portman
Inman News

Q: I have a real difficult situation here that I need help with. One of my tenants has an abusive husband who hits her. More than once, she’s called the police, and the resulting chaos is really upsetting for the other residents. I feel sorry for her, but I can’t tolerate these disruptions. I know that if I had a tenant who fought with other residents, I could evict that person for disturbing the peace. Can I do the same with this couple? –Bill L.

A: You’re right when you point out that in general, when tenants cause disturbances of this magnitude, you’re on solid ground to terminate their tenancy for failing to allow others the quiet enjoyment of their rented homes (let alone for engaging in criminal assaults and batteries on your property). But the answer may be different when it comes to domestic violence between spouses (or between domestic partners, or even nonmarried or nonregistered couples). It depends on whether your state has passed specific legislation protecting domestic violence victims.

Some 14 states have passed such laws, and the number is sure to grow as several state legislatures consider pending bills. Typically, these laws prohibit landlords from refusing to rent to victims of domestic violence, prohibit landlords from evicting victims on the basis of domestic violence situations, and give victims a right to terminate the lease without responsibility for future rent. Many laws require proof of domestic violence victim status (such as a restraining order protecting the victim, issued against the perpetrator) before a tenant can claim the protection of these laws. A number of states give the landlord (or a court) the right to evict the perpetrator, but not the victim, and one state gives landlords a limited right to evict the victim. These laws have taken their cue from the Violence Against Women and Department of Justice Reauthorization Act of 2005, 42 U.S.C § 1437f(r)(5), a federal law that applies to all Section 8 tenants (tenants who use federally issued housing vouchers to pay for a portion of their rent). Domestic violence victims who are Section 8 holders won’t jeopardize their right to continued Section 8 vouchers as long as they have otherwise complied with other program requirements, have moved in order to protect someone who is or has been a domestic violence victim, and “reasonably believed” that they were imminently threatened by further violence.

You’ll want to check whether this tenancy is supported by Section 8 vouchers, and if it isn’t, find out whether your state has passed domestic violence legislation that protects tenants. If so, be sure to adhere to its requirements, but keep in mind that you are not obliged to continue to rent to someone who can’t afford the rent. All too often, the perpetrator leaves behind a spouse or partner who cannot shoulder the rent alone. In that event, you may terminate for nonpayment of rent, as you would with any other nonpaying tenant.

Q: I have a year’s lease but need to move at the end of 10 months because of a job change. I asked the management company if they’d let me out of the lease without having to pay for the remaining two months if I found an acceptable new tenant, and they said yes. This is a tight market and the apartment is nice, so I’ll have no trouble getting a sub, and I’ll leave it spotless. But the company is holding me to a clause in the lease that says if I break the lease, the owner can deduct from my security deposit the leasing commission that the owner paid the company. Is this legal? –Katy D.

A: Tenants who live in states that closely protect tenants’ security deposits will have some formidable arguments on their side. Most states strictly control how landlords may use the security deposit, and limit that use to unpaid rent and damage beyond normal wear and tear. Those states don’t include “reimbursement of leasing commissions” as a permissible use. In these states, the owner’s attempt to recoup this amount from the deposit would violate the statute.

That’s not the end of the matter, however, because the owner could also seek to enforce this clause by suing you in small claims court, in a lawsuit that doesn’t involve the deposit. Here’s where things get a bit tricky, but when you study how this clause works, you’ll see how you can attack it.

The management company makes its money (its commission) by landing a tenant who signs a year’s lease. Owners want stable, non-lease-breaking tenants, so it is in their interests to provide, in their contract with their management companies, that if the tenant breaks the lease, the company must repay some or all of the commission. Such an arrangement encourages the company to carefully screen prospects and choose only those who are not likely to skip or otherwise leave. There’s probably nothing wrong or illegal about such a system.

Now, consider what’s in place instead in your situation. You, not the management company, are being asked to reimburse the owner for the commission, which does nothing to incentivize the management company to pick better tenants. Not that your lease-breaking should be without consequences — in most states, the owner is entitled to the benefit of the rest of the year’s rent, minus what he collects after he has rerented the unit. But that should be the limit of your liability — if the owner wants to recoup some of the commission it paid on the grounds that the management company failed to deliver a lease-honoring tenant, it has ample opportunity (in its contract with the company) to do so.

Q: I regularly give new tenants a “rent concession” of a free first month’s rent in exchange for renting from me (I set my rents a bit high so it all works out in the end). My lease provides that if the tenant breaks the lease and leaves early, I can take that concession from the security deposit. My lawyer says this practice is risky. This is a common practice, and I can’t believe he can be right. What do you think? –Justin Z.

A: You may get away with this practice if you’re not challenged by a lease-breaking tenant, but if one of them fights back, you may be on shaky ground. Here’s how such a challenge can come up: Suppose the market rent for an apartment is $1,000 per month, or $12,000 for the full year. To attract tenants, you offered a free first month, but in order not to lose money, you set the monthly rent at $1,090 (that’s $12,000 divided by 11 months). When one of your tenants breaks his lease and you take the rent concession from the security deposit, the tenant will go to small claims court and sue for its return, arguing that the deposit can be used only to remedy damage and cover unpaid rent. The concession, he’ll say, is not unpaid rent, but is instead a roundabout way for you to obtain a market rent spread over the life of the lease, as you concede. A judge who sees your “concession” for what it is won’t let you take it from the deposit.

You are certainly entitled to hold the tenant to his contract, but when a tenant breaks a lease, in most states you must make reasonable efforts to rerent. Once the unit is rented, your former tenant is liable only for the vacant months — at $1,090 per month.

Copyright 2008 Janet Portman

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