Another Thursday is upon us, where has the week gone? Rent payments are starting to trickle in, where has September gone? September? Where has the summer gone? Is it just me, or is this year flying?
Maybe it is flying because it has been a very busy year for me, with the presidency of the Wisconsin Apartment Association taking more of my time than I thought it would. If that is the case, then maybe next year will be more normal, as the election for the 2011 WAA officers were held a few weeks ago, and when the voting was over, I was not elected for a second term. The results of the election didn’t surprise me. The WAA is going in a good direction, but it is capable of being so much more than what it is, and I would not let being on a good path stop me from finding ways to put that organization on a GREAT path. However, stepping away from the status quo is not always the popular choice. I am not upset about not being chosen for 2011, however I am disappointed that so many things I wanted to accomplish simply didn’t happen. Although, I can honestly say it wasn’t for lack of trying. Mine was not their vision… so it only made sense for them to have someone whose vision they shared.
Anywho.. back to Thursday, and another installment of the Dr. Rent Radio Show on WNRB-LP, which can be heard on 93.3 FM on your radio from 5 PM to 6 PM, assuming you are in the immediate Wausau area.
A couple of interesting questions have come up. I have had people ask what type of things should you do to “qualify” a new tenant. What kind of background checks should you do, and are any of those better than others? As one of those checks, a credit report will be part of that answer. But, there are three national credit reporting agencies – are any of these better than the others? A question we covered a few months ago came up again. We talked not that long ago about the 21 days needed to get the deposit back to the tenant, what happens if that deadline is missed? Finally, for our main topic we will give you an update on Wausau’s Housing Task Force. We met again earlier this week.
Last week we had a question on re-renting fees and if they are legal. First, tenant’s need to understand that a lease is a contract for a set period of time. I don’t know how often that a tenant thinks that if they give landlord sufficient notice that they are moving early and turn the keys back in, that should end the lease. It doesn’t. However, in order for a landlord to hold the tenant to the terms of the lease, the landlord is required to “mitigate” the tenant’s damages; i.e. they need to make reasonable efforts to find a replacement tenant. Any costs that a landlord incurs in finding the replacement tenant can be billed back to the original tenant breaking their lease, such as advertising.
Many landlords, rather than trying to track all of the individual costs of showing, advertising, etc. will charge a standard re-renting fee. Is this allowed? Again, my favorite answer is maybe. Was the re-renting fee specifically covered in the lease and agreed to by the tenant? In that case, most people would agree a flat fee would be allowed. However, if the landlord charges a flat fee as part of the move-out letter, then this flat fee would only be allowed if the actual costs incurred by the landlord could be proven to be as much (or more) than that fee. Any time spent showing the property done by the landlord and didn’t result in any actual “out of pocket” costs are not normally allowed. However, if your normal practice is to hire someone to do the leasing, any costs that have to be paid where actual money changes hands would be allowed.
A very complicated question that came up when I was in Milwaukee had to do with a landlord who rented both halves of a duplex to a tenant. It was not done as two separate leases, but was done as one lease for the entire building. It was originally for a year term, but that was some time ago. The lease had long since converted into a month-to-month holdover agreement. The tenants moved out of half of the duplex one month (let’s say April) and turned in the keys. They then moved out of the other half of the duplex a few months later (let’s say July). So, when does the landlord need to start worrying about getting the deposit back? Normally, I would say at the end of July. The entire building was rented as one building, and until the entire thing is vacant, it is not vacant. That would be like someone renting a 2 bedroom apartment, moving out of one of the bedrooms a few months early. That has no relevance on the deposit.
However, it is always important when answering questions to get as much of the detail of the situation as possible. I apologize when I try to answer a landlord question that it feels like I am playing 20 questions; they ask me one, but before I answer, I ask 10-15 back. Three is a reason for that… what seems like a black and white situation can get very complicated very quickly, as was the case here.
The reason why the tenant moved out of half of the duplex in April was because the landlord gave them notice they had to move (month-to-month agreement, either party can give notice). The landlord allowed them to stay in one half, but they had to vacate the other half. After a few months, it was still not working out and the landlord gave them notice to vacate the rest of the property. With that change in the facts, this now becomes very muddy.
If this case went to court, it could go one of two ways. The court could agree that only part of the unit was forced to be given back, and returning of the deposit wouldn’t happen until the rest of the unit was surrendered. However, it would also not surprise me if the court decided that by terminating the agreement for half of the duplex, the landlord ended the original (primarily verbal) month-to-month agreement, and then started a new agreement for just ½ of the duplex. If the court went this way with things, that deposit would have need to be returned after they vacated that first half. This type of situation is really not covered well within the law, and it would come down to how a judge perceived this situation. However, moral of the story: Don’t do verbal rental agreements.
Another question came up about tenant’s guests. The tenant had someone living in the apartment that was not on the lease, this happens quite often. The lease period ends, and the tenant vacates. However, that guest who was not on the lease and who did not have your permission to be there is still there, they didn’t leave with the tenant. Because they are not on the lease and never had your permission to be there (you may not even know their name), must you evict them like you would your tenant; or are they trespassing and you can simply change the locks or have the police remove them?
A lot of that depends on your original tenant. Is your tenant willing to give you some type of statement IN WRITING, that they asked that guest to leave and the guest refused to? If they are, it is much more likely that you, as a landlord, will be able to treat that person as a trespasser, as a squatter, and have them removed separate of an eviction. (The squatter is probably a “tenant at will” of your original tenant, and any case that the squatter has would probably be against your tenant, and not you.) However, if your tenant is not willing to assist you, then you will have to file for eviction. It doesn’t matter if you know the squatter’s name, because you will be filing against your former tenant. Once that eviction goes through the process, everyone who is in the unit who is there by rights of having your tenant’s (versus your) permission to be there will also be removed.
I do want to make very clear, that this is a very tricky situation and my best advice would be to spend the money to have an attorney help you through this one.
Finally, we talked about bribing tenants to leave. This does get done from time to time and it doesn’t make sense to many landlords. If a tenant owes you a couple of months of back rent, which could easily add up to a couple of thousand dollars, why would a landlord give a tenant who owes them money a couple of hundred dollars? Simple. Time.
If you are going to file for eviction, the filing fees are nearly $100. You then need to have them served, in Marathon County, the sheriff charges $75 per person. You then get to wait 3 weeks for your court date. If you get a default at your initial appearance, you then need to get the writ and have the sheriff execute it (in Marathon County, this is $100). Assuming they move when the sheriff orders them too and you don’t have to go the route of bonded movers, it is going to cost you easily $300 and take a month or more. And let’s face it, it is nearly impossible to try to re-rent a property where the people that are still in the property are being evicted, you really cant even start marketing until they are out.
Something that many landlords do, and I have found nothing that makes this illegal because it is agreed to by both parties, is for the landlord to forgo the eviction process by getting the tenant to voluntarily surrender the property, and offering a cash incentive to do so…. Not just a credit on their account, but actual CASH. Why would you give a tenant who owes you money $200 or $300 in cash? Like I said before, time. The eviction is going to cost you $300 on the low side and take a month if not more. If the tenant would be willing to voluntarily leave in 2-3 days for the same $300, you can start trying to re-rent the property immediately. Also, they are more likely to leave the unit it good shape knowing that if they don’t, that could jeopardize the cash settlement offer.
Never a dull moment on the radio show… so until 5 PM this evening… HAPPY RENTING!!