Landlord Prosecuted Over Lease, Fees

by Chris on January 16, 2017

The Attorney General of West Virginia announced that he has filed a lawsuit against the state’s largest residential landlord claiming the landlord’s lease provisions and fees violate the state’s consumer and credit protection statutes.

The prosecutor alleges that a number of lease provisions are unconscionable. This landlord leases to many students and inexperienced renters.

The provisions in question include:

Charging a non-refundable cleaning fee, which covers carpets and painting, in addition to the security deposit. Under the lease provisions, any damage in excess of the cleaning fee is charged to the deposit;

Assessing a transaction fee of $30 to process credit cards;

Charging a “convenience” fee of $5 for online transactions;

Late fees equal to $50 after five days, and then $5 per day thereafter;

A $50 charge for returned checks or declined charges;

A 20 percent “overhead” tacked onto security deposit deductions;

Requiring tenants to vacate by 9 a.m. on the last day of the lease, and charging a $100 per hour fee after that until tenant leaves;

A $200 fee if the tenant abandons the lease, plus $25 for each item left behind. Tenants cannot terminate the lease for any reason;

Stating that rent is not conditional on the landlord’s performance under the lease;

Tenants are to pay “any and all” expenses incurred for collection;

Any defects or damage not reported within 72 hours of taking possession are deemed to be caused by the incoming tenant;

Leases can be terminated without notice in the landlord’s discretion. Leases can be terminated for breaking any rule. Upon termination, the landlord can enter the premises, remove the tenant’s belongings, and tow cars;

A number of exculpatory provisions that attempt to shift the landlord’s liabilities and responsibilities on to the tenants, including a requirement that all tenants and guests waive the right to sue for premise liability, and a disclaimer of all warranties, including habitability and quiet enjoyment; and

Limiting the jurisdiction of any dispute to a local court, and requiring tenants waive the right to a jury trial.

The lawsuit seeks an order requiring the landlord to refund the money collected from the fees, forgive any outstanding balances, notify credit bureaus to delete credit information, and pay a $5,000 civil penalty for each violation. The Attorney General’s office says it has received at least 28 formal complaints against the landlord.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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Landlords, Leases, and Marijuana

by Chris on January 16, 2017

The legalization of marijuana quickly is affecting more and more landlords, and many have questions.

Should landlords ban recreational marijuana? Is it possible to ban medical marijuana? If so, how is it done?

Unfortunately, many of these laws are new, and in flux. For example, Michigan passed a law just a week ago that explicitly allows landlords to prohibit both smoking and growing medical marijuana in a rental home. Each state’s legalization framework is different, so there is no one-size-fits-all solution.

Disadvantages to Landlords

Why should landlords be concerned about marijuana? Because marijuana in rental properties presents a number of potential problems.

Marijuana use, including state-approved medical marijuana, is illegal under federal statutes. So long as this remains the case, a landlord who allows marijuana use or cultivation at a rental property is breaking the law. Landlords who are tolerant have difficulty monitoring individual tenants, and there have been a number of cases reported where those tenants have exceeded the authority of both federal and state laws.

While it is rare for the federal government to prosecute marijuana cases, a handful of landlords have been convicted as accessories. Some have suffered fines, imprisonment or forfeiture actions against the rental property.

Colorado, at the forefront of legalization of recreational marijuana, saw a disturbing spike in apartment fires. These fires were caused by tenants attempting to condense the marijuana into a popular concentrated form using butane.

Landlords have experienced property damage from tenants growing marijuana plants. This ranges from flooding due to overwatering to retrofitting pipes and electrical systems within the unit. Another related cost is a sudden spike in water, heat or electricity in units where the landlord pays utilities.

Recovering a unit is more time-consuming and costly when the former tenant has smoked marijuana, similar to units of tobacco smokers.

Advantages to Landlords

There are some businesses that take advantage of the popularity of marijuana. A number of bars and even some hotels now offer a safe place for patrons to use marijuana in public. It stands to reason that some private landlords may experiment with a policy of tolerance in order to attract this pool of rental applicants.

Because legalization is so new, there simply is no statistical data on whether advertising to marijuana users is a good business strategy for rental property owners.

However, landlords considering this policy must keep in mind that it likely violates federal law, and could place the landlord at risk for prosecution.

Landlords and Medical Marijuana

The majority of states that have legalized marijuana recognize the value of medical marijuana. (The federal government maintains that there is no evidence that marijuana is useful in the treatment of any medical conditions.)

In order to obtain a prescription, the applicant typically must be diagnosed with some persistent medical condition. That condition likely would meet the definition of a disability under anti-discrimination laws like the Fair Housing Act.  However, marijuana use, including “medical” marijuana, remains illegal under the federal law, and fair housing officials have yet to take an opposing position.

Disputes that are likely to arise with medical marijuana will center on second-hand smoke, and smells, damage or security risks caused by cultivation. If a tenant were to obtain other forms, like oils or edibles, it is less likely these problems would occur.

It is extremely important for landlords to recognize that they still are dealing with a tenant who may have a disability as that is defined under the Fair Housing Act. So, for example, it would not be a good policy to reject a rental applicant because the person uses medical marijuana to treat a disability. It may be better to simply inform the applicant that smoking marijuana or growing plants is not allowed on the property, and give the applicant the opportunity to decide whether to pursue the vacancy. Note, however, that state laws differ, so you need to know your rights and responsibilities before you speak to any rental applicants.

Past drug addiction also is protected under anti-discrimination statutes, and is not a topic that should be explored during tenant screening.

What Can Landlords Do to Regulate Marijuana Use?

There are a number of strategies that landlords employ to prohibit marijuana use. It is helpful to remember the reasons why the landlord wants to regulate marijuana — for instance, to minimize tenant complaints, to minimize property damage, to reduce crime, and so on.

The most encompassing strategy is to prohibit marijuana possession and use because it is illegal under federal law.

Most state legalization statutes apply only to tenants over the age of 21. Those landlords who manage student rentals and typically deal with younger tenants, would want to ban marijuana use even under the state’s statutes.

Marijuana use or cultivation may be viewed as a disturbance which violates other tenants’ quiet enjoyment.

Pot smoke may violate the landlord’s smoke-free housing rules. Smoking bans are in place in part because smoking increases the risk of fire.

Smoking units cost more to maintain and recover.

Because eviction courts can be sympathetic to tenants, it is important to link the use of marijuana to potential for income loss — federal government penalties, tenant complaints, increased cost to recover units, liabilty for fires and so on. It may not be enough to prohibit marijuana simply because it is unappealing to the landlord or the landlord finds the practice immoral.

Marijuana and Lease Agreements

Generally, the state legalization rules allow landlords to prohibit marijuana smoking or growing by placing a prohibition in the lease agreement. Under rules of contract law, the language must be included when the tenant signs the lease. An addendum added later may not be enforceable against current tenants.

Whether using an addendum or simply modifying the lease language, it is important to have the new provisions reviewed by a local landlord attorney.

There are basically three options:

1. Add a marijuana prohibition to an existing smoking ban, or instance, “No tobacco or cannabis smoking, including medical marijuana, is permitted inside the Premises or in Common Areas.” Because cigarette smoking causes many of the same problems as marijuana use, it’s possible those issues are already addressed in the lease. But be careful. Other provisions like anti-crime rules and eviction provisions may need to be updated at the same time.

2. Create a separate (and new) lease provision that prohibits cannabis smoking or cultivation. This provision must track other language in the lease, so a thorough review is necessary to avoid conflicting language. For example, if tenants are held to a strict policy of marijuana, but are allowed a written warning for other lease violations, the marijuana clause may be more difficult to enforce.

3. Include a Marijuana Addendum. Typically, this addendum will be a separate page and includes all provisions regarding marijuana. This can be the most effective option because it may be the easiest way for tenants to understand their obligations. Also, an addendum typically is signed by a tenant, and key provisions initialed, which serve to emphasize the rules.

A Marijuana Addendum will include these key provisions:

A reference incorporating the language into the lease.

Statements explaining why marijuana is prohibited, including its illegality under federal law, the likelihood of triggering complaints, the fact that the property is subject to a smoking ban, and so on.

The document will specify what speficic behavior is prohibited, such as marijuana possession, cultivation, and smoking.

An addendum will spell out the penalties for violating the policy.

It’s important to review the entire lease in light of the new addendum to avoid conflicting language.

While it is possible to find a sample Marijuana Addendum online, landlords must keep in mind that such forms are instructional only. DO NOT copy online forms and insert them into your lease. Each example you find will be tailored to a specific state, most likely Colorado or Washington. The rules may not apply in your state, and there is no way to know if you are choosing a good example.

Regardless of the method you and your attorney apply to modify the lease, the critical focus should be on explaining the rules to the tenants. A lease is not only about enforcement, it’s also about compliance. If tenants never break the rules, there will never be a need to enforce the lease in court.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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3 Reasons to Raise the Rent

January 16, 2017

Given today’s landlord-friendly market, it seems like the right time to spike up rents. But high rent doesn’t always translate directly into profits, especially if the property is overpriced. Pinpointing the correct rent figure requires more surgical precision. That’s because high rent can trigger some unexpected losses. One consequence is a month or more of vacancy, […]

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Landlords Win Battle Over Utility Liens

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A federal judge had declared that Philadelphia’s municipal utility violated landlords’ rights by placing liens on rental properties when tenants failed to pay their gas bills. The controversial practice begin several years ago, when city officials decided that liening a landlord’s property was a more cost-effective way to collect delinquent utility bills. At one point, the […]

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Top 5 Landlord Tips for 2017

January 2, 2017

January brings the promise of a profitable new year for your rental business. Here are some suggested resolutions that undoubtedly will make 2017 a prosperous year for you: Tip #1: Rent Payment History Now Included on Credit Reports Landlords in Canada suffer a disadvantage when it comes to tenant screening reports. That’s because eviction reports […]

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Landlords: Best Strategies for Handling Noise Complaints

January 2, 2017

Noise complaints are one of the most common disputes landlords face. The nature of noise complaints tends to be perpetual; tenants often describe weeks or months of disturbance. Their biggest gripe: that their landlord does nothing to ease the suffering. The fact is noise complaints cost landlords in tenant retention, time spent managing the property, […]

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New Rules in Store for Toronto Landlords

January 2, 2017

An apartment rating system where landlords post a green/red or pass/fail sign in public view is one of the changes that may be included in a new rental bylaw approved two weeks ago by Toronto City Council. The bylaw is designed to strengthen the existing regulatory framework regarding the condition of rental properties. Over 200,000 […]

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6 Tips for Landlords Offering Tenant Incentives

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Tenant incentives, like rent reductions or help with move-in costs, are something Canadian tenants don’t often see. While these incentives are not likely to appear in tight markets like Vancouver or Toronto, news sources are reporting that other landlords — like those in Calgary facing record high vacancies — are being forced to consider all […]

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Landlords: Updating Your Lease Agreement for 2017

December 19, 2016

If it’s been a while since you last updated your lease agreement, 2017 is a good time to do it. A lease agreement is there, first and foremost, to protect a landlord. But, with an onslaught of new rental regulations and the sustained popularity of some new trends, your current lease may fall short. Take […]

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Property Management: 10 Key Tips — About Keys

December 19, 2016

Are you lax when it comes to changing the locks at your rental properties? Many landlords are, especially in single-family rentals. But that’s a bad practice, one that can lead to injury — and income loss for landlords. In addition to changing locks, there are other best practices landlords should adopt regarding the handling of […]

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