It’s hard to believe another week has gone by. With the summer days being filled with the busiest time of year for rental properties, and the summer evenings being filled with Woodchuck’s baseball… finding a few minutes to blog is not as easy as it once was.
Speaking of Woodchuck’s baseball, yes they are off to a slow start this year, but don’t let their record fool you. A number of those losses have been 1 or 2 run heart-breakers. Many didn’t show up for last night’s rain delayed game and fewer still stuck around after Waterloo’s second inning grand slam and things were not looking good starting the 6th inning down 7-1. But a 6th inning rally made a game of it (7-6) before a two-run Waterloo homer later in the game sealed our fate. Our 9th inning rally fell just a hair short. But, even with a shaky record, the games are still well attended, they are still fun, and did I mention that in the off season, Woody got back into shape and is back to something closer to his 2009 self?
With this 5-game home stand, I have not actually pre-recorded a Dr. Rent Radio Show. Since there is no home game tonight, we will go ahead and do it “old school” (i.e. live). Yesterday,Wausau’s Housing Task Force met and on the agenda was landlord/rental licensing. Needless to say, with me dead set against it, those conversations get testy at times. What we discussed will be the main topic of tonight’s show. That is if we get that far as we have a number of questions to cover. A renter complained about the 6 people (2 adults, 4 kids) living in the 2 BR unit next door, is there a limit on the number of people who can live in an apartment? A tenant is getting billed by their landlord because a kitchen appliance died and needed to be replaced, is this a tenant or a landlord expense? A tenant got a 30-Day notice to vacate, is this a valid notice since the tenant is in the middle of a 1-year lease? A tenant needs to break their lease and understands the landlord needs to make an effort to re-rent the property, what efforts are reasonable? Finally, when buying a rental, do you have to accept the existing lease if those lease terms are unacceptable?
Our last live show was our 6 year anniversary show. To commemorate this milestone, I found my outline for the first ever Dr. Rent Radio Show, broadcast on June 1st, 2005 and I did a live show covering that same outline. The main topic was a discussion of the benefits of renting and the pro’s and con’s of both renting and home ownership. It was interesting because back then, my show was on Wednesdays, and the Tuesday show in the same time slot was a local Realtor talking about home ownership. It was also interesting to see how prophetic that first ever show was, considering the housing market crash had really not happened yet.
In this show, we discussed when renting was the better option vs. home ownership from a purely financial view. We touched on who the average landlord is, and who the average tenant is. (In reality, both landlord and tenants are so varied, there really is no way to generalize an “average” one.) We talked about when, economically, renting is the better option. Some of the major factors are how long you tend to stay in one place, how secure you are in your source of income, and your ability to save money. Financial situation plays a HUGE roll in renters vs. home-owners, but at the time of that show, there was an increasing trend in “renters-by-choice”, people who could easily afford a home, but chose to rent instead. Six years later, with the volatility in the housing market, the numbers of “renters-by-choice” who are just going to ride out the housing market storm continues to rise.
We touched on barriers or hazards of home ownership for those who are just on the very financial edge of being able to buy a home. We talked about the additional expenses (such as PMI) that happen when you don’t have 20% down. We talked about big ticket maintenance issues and sufficient savings for a few months worth of house payments in case of income fluctuations. We also discussed what effect a foreclosure can have when a good renter turns into a homeowner when they were not financially ready to do so and how that can negatively impact them finding a quality rental.
We ended the show shedding some light on false rumors out there about landlords and tenants. False landlord rumors included that they are all rich, live out of town away from their properties and really don’t care. And, that all of the rules are in their favor. We also dispelled the rumor that you can’t lose money in investment real estate (a rumor perpetrated by those late night, no-money-down infomercials). False rumors about tenants included them not paying property taxes (actually, they tend to pay more than homeowners do when you think about it), that renters don’t care about their community (which many do, and I have seen renters run and serve in city councils and run for mayor), and having a rental property next door will lower your property value. Not true at all, there is no evidence to support that. As matter of fact, a balanced housing policy tends to strengthen a property tax base.
Last week’s Dr. Rent Radio Show was actually a re-broadcast of the May 26th show, which was a show focused around two very complicated questions. I broke those questions into some of their base elements.
How much notice does a tenant need to provide if they are going to move out at the end of a lease? As a courtesy to the landlord, the more notice you can give is greatly appreciated. However, from a legal standpoint, unless there is some type of notice provision in the lease, no actual notice is needed. Even if there is a notice provision in the lease, that provision is not enforceable unless the landlord reminded you of that provision as that timing came closer.
Can a landlord charge for cleaning and take it out of the security deposit? If that cleaning was required for issues that are beyond normal wear and tear, then yes. If the cleaning was normal wear and tear, no. (And yes, I realize the can of worms that opens with what is “normal wear and tear.”) However, even if the cleaning is needed because it is beyond normal wear and tear, when taking the money from the deposit, you do need to itemize what was spent cleaning what, and indicate why.
How much can you charge to replace carpeting if damaged by the tenant? If the reason the carpet needed to be replaced was tenant damage, you can charge the actual, full cost to replace it. However, you do need to factor in the age of the carpet. You cannot charge the tenant full price to replace carpet that was halfway through it’s useful life. So, although you can charge based on today’s carpet prices (and not what the carpet cost when you originally put it in), you do need to adjust that for the amount of the useful life left. If the carpet was only ¼ through its useful life, you can charge the tenant 75% of the cost. If the carpet was half way through, you can charge the tenant half. If the carpet was new, you can go after the full cost. However, if the carpet was beyond its useful life, don’t expect to be able to bill the tenant anything. How long is that useful life? That all depends. Most courts will figure 8-10 years. If you want to show the court your useful life is longer, you will need to be able to prove that.
If a tenant breaks their lease, can re-renting fees such as advertising costs and labor to show the property be taken out of the security deposit? Not unless the tenant agrees. The only things that can come out of a deposit are unpaid rent, damages and utilities. It is possible to withhold other charges (such as re-renting fees), but if you are going to do that, there must be a separate agreement from the lease called the “Nonstandard Rental Provisions” that address those items.
Then there was a two-part question on landlord repairs. First of all, at what point does a repair become a landlord responsibility? The law states that repairs that are “minor in relation to the rent” are actually a tenant issue. Of course, the law does not define “minor in relation to the rent.” In this case, the question pertained to a broken toilet seat, an item that probably costs less than $20. Most courts would agree that would be a tenant repair item. Also, if it is a big ticket item, what if the landlord doesn’t make the repair because they simply don’t have the funds to do so? Is there a requirement that a landlord has a money reserve for major repairs? There is no such requirement, and just as we talked about the issues homeowners can have when they are living paycheck to paycheck and get hit with a large item repair (like a furnace or water heater), that same issue can be devastating to a landlord who has very little margin figured in and is offering bottom dollar rents. A tenant does have the recourse of vacating the property if the situation makes the property “untenantable” and justifiably break their lease.
Another question came up is one we talked about a few months ago on a different Dr. Rent show. The law dictates a 28-Day notice to terminate a month-to-month agreement. Can this be changed by the landlord to a longer notice (45 or 60 days)? If the change is done in writing, and agreed to by both parties (landlord and tenant) as evidenced by their signing this written agreement, then that longer notice requirement is perfectly legal. Most landlord-tenant laws dictate the rental agreement terms if they are not addressed in the contract. In most cases, you can change the statutory rental terms with a written agreement. There are a few exceptions (such as landlord maintenance duties and security deposit withholding for normal wear and tear) that the law prohibits landlords from changing in residential leases.
And, if you had a year lease that ended a few years ago, is that lease still valid? If you continued to pay the rent per that original lease and the landlord continued to accept it, then you have become a holdover tenant. PerWisconsinlaw, in residential situations you are now on a month-to-month term and with a few rare exceptions, all of the other terms of the original lease still apply. If the (residential) lease had language in it about automatically renewing for an additional year term, that language is actually not binding on the tenant unless the landlord provided a proper reminder notice.
So… there you go, that makes up for a week without blogs. In one post you get a Woodchucks status update, a radio show preview, and a summary of the last TWO radio programs. Tune in tonight for a LIVE episode. Until then…. HAPPY RENTING!
The Dr. Rent Radio Show can be heard Thursdays from 5 PM to 6 PM on WNRB-LP, 93.3 FM in the Wausau area, and on the web by going to www.wausauhmong.org and clicking on the Hmong Radio link.