PAULA'S SOUTHAMPTON BLOG: Paula Hathaway, REALTOR, LBA, ...The Most Informed Agent In The Hamptons! (Douglas Elliman Real Estate)

WHAT IS IT WITH TENANTS AND LANDLORDS?...No Amount Of Legal Council Is Too Much, IMHO!

I don't know what is going on in your markets but here in the Hamptons, you can get burned really easy right now, especially if you are an agent and/or a landlord.

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:

1. Seek advice from a  lawyer--protect your investment of time and money from your tenant and a potential difficult tenancy.
2. Make sure he generates a lease that is specific to your home and your requirements for a tenant.
3. 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:

• 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.--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 damages and 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 there 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. 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.) 

• 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 encoumbrances 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 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 handles rental properties.These items will also help you 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!!!