LANDLORD/TENANT ISSUES HAVE BECOME A LEGAL NIGHTMARE...
I don't know what is going on in your rental markets but here in the Hamptons, you can get burned very easily especially if you are an agent and/or a landlord. You can get yourself into "hot water" over many sticky issues during and after the lease is fulfilled.
We have become a very large rental market here and because of that, the litigious nature of a few has become the dreaded fear of many.
I spoke to my manager to day and he told me that we are changing our lease entirely--we are no longer going to give the courtesy of writing a lease for landlords because the changes that many agents and landlords decide they want in the standard lease are being done indiscriminately, leaving comments and markings all over the document. My advice to a homeowner who wants to rent their home out includes the following three things, without fail:
- Seek advice from a lawyer--protect your investment of time and money from your tenant and a potential difficult tenancy.
- Make sure he/she generates a lease that is specific to your home and your requirements for a tenant.
- Also seek council on any local requirement for permits to rent out your home.
If you are a homeowner and you decide to rent your home, do not fail to get legal guidance for your lease....You do not want to be in the situation many people have found themselves in here in the Hamptons. There are many little known facts that need to be adhered to or you could be in a lot of trouble--When a homeowner in the Hamptons decides they want to rent out their home they will need the following, among other things: "a drawing of the premises in quarter inch scale with outline of closets in each bedroom, how the doors open to each room, where the smoke and CO detectors are located and a sketch of the basement."
Here are a few examples of what has taken place this past summer:
- A tenant took possession of a house with a lease that was not up to date in terms of the new Southampton Town Rental requirements. There was no permit for the rental and the tenant knew that the new requirement was in place for the landlord to have Town approval in order to rent the property out...Any code violations such as a gate that is not self closing near a pool, an alarm out of order on a child-protection door to the back yard, a bedroom in a basement without egress windows, etc. all needed to be brought up to date by the landlord in order to pass an inspection. In this one case the tenant knew of the law and knew that there was no permit; they took occupancy anyway and told the landlord that they would not pay any of the rent because he (the landlord) had not applied for a rental permit. The homeowner was held hostage to his tenant and under the guidance of a lawyer, they were forced to comply with the Town requirement and to repair any of the violations that were discovered during the application process. Any rent that was due up to the date of the approved permit was not required to be paid by the tenant...a whole month of free rent!
- The security deposit monies, required to be paid by the tenant at the lease signing is not the property of the homeowner. It belongs to the tenant and must be held by the landlord in a separate account from the homeowners own money. In other words: No co-mingling of funds. Many landlords do not know this and they end up spending the money as they do the rent money and in many cases they do not have the money to return to the tenant (minus applicable costs) at the end of the lease. This is an opportunity for a tenant to sue for their deposit and if they can prove you did not keep it separate from your one money they can win back all of the deposit plus! I instruct all homeowners that they need to open a checking account for the tenants money with their bank so that they can keep that money separate from their own. At the time the tenant vacates the premises, the balance of the deposit, minus the bills paid by the landlord on behalf of the tenant, is paid back to the tenant. As an agent, it is always wise to advise the landlord to create a simple checking account specifically for the tenants security deposit. (I always put it "in trust to" the tenant so in the event something happens to me, the tenant will be able to get his/her money without having to fight for it. They love the idea!)
- Most agents do not realize that once they secure a tenant/lease for a homeowner and once the commission is paid, the agent must not, for any reason go back on the property until that lease is over. This obscure part of the law in most states comes up only if and when there is a violation or a criminal act such as a theft of valuables from the home. It is best to stay away from the property at all costs, otherwise you could be included in any of the legal claims that can arise when the owner returns and finds missing valuables such as a painting or expensive vase or other "object de' art". All of the above are potential legal snags or encumbrances that you, as an agent may get pulled into, because you have been paid a commission on the deal. Be aware of what the lease states and make sure it is generated by legal council; either your company's legal department or the landlords lawyer.
These few practical recommendations will save you a lot of trouble if you are renting out your property for the first time or if you are an agent who is starting to handle rental properties.These items will also help you, the homeowner, decide if you are really up for the term of the lease with all the encumbrances and potential problems that can arise in the process. Landlord/tenant issues can ruin the enjoyment of your home and can become more problematic than you ever expected.
You want to feel safe, NOT sorry when it comes to turning your home over to a stranger!!!
**ALL INFORMATION AND CONTENT IN THIS BLOG IS ORIGINAL TO PAULA I. HATHAWAY. The views expressed herein are my personal views and do not reflect the views of Douglas Elliman Real Estate
Paula I. Hathaway, Senior Broker Associate, Douglas Elliman Real Estate
Southamtpon Village Real Estate Specialist since 1995; Also Specializes in North Sea, Noyac, Water Mill and Bridgehampton, New York
Diamond , Gold and Chairman's Circle Awards; Top Producer since 2005
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