ma real estate ceu course - residential rentals: landlord/tenant issues_2-10-14

Residential Rental:Landlord/Tenant Issues

RE09R07

Practicing Safely & Lawsuit-Free!

Residential Rentals

• Disclaimer: This presentation is based upon

Massachusetts law and the best information available through

the Real Estate Licensing board and the local Boards of Realtors

and the Rental Housing Agency. This presentation does not

constitute legal advise and is no substitute for individual legal

advise by a competent attorney who is familiar with the

landlord/tenant laws of your state and the specific details of your

situation. All Brokerages specifically recommend that its

clients seek out legal counsel prior to entering any

contractual agreement in this area.

Introduction

• Providing Rental Representation

for Clients

• Practicing Rentals within the

scope of the Law – Legal

Compliance

• CYA

Residential Rentals

• Mandatory Consumer-Licensee

disclosurea. Not required by law in rental of property

b. You still have an agency relationship with the

landlord, tenant or both and need to

maintain your fiduciary awareness to

them.

I. License Requirements:

A. License required. •“No person shall engage in the business of finding dwelling

accommodations for prospective tenants for a fee unless

such person is a licensed broker or salesperson.”

B. Exception – a managing agent under

contract•“A managing agent (or employees of that agent) under

contract with the owner of the real estate in the regular

course of their employment is not required to be licensed.”

II. Written Fee Disclosure

A. First personal meeting to discuss all rental property.

B. Disclosure to include:

1. Whether the tenant will pay a fee for rental services

2. The amount of the fee

3. Manner and time of when the fee is due to be paid.

4. Is the fee payable regardless if tenancy is created.

5. Signature of broker/salesperson with license # & date

6. Signature of prospective tenant or refusal to sign noted.

II. Written Fee Disclosure(cont.)C. This fee disclosure requirement applies to ALL

residential rentals.

D.The fee disclosure MUST be kept on file by the

broker for three (3) years and is subject to audit by

the licensing board.

***See the attached MAR Broker’s Rental Fee

Disclosure form

A. Exclusive –

● In writing

● Include Addendum

**Standard Right to Lease Agreement-attached

**ERA Key– Sample Lease agreement

Addendum-attached:

*This form clarifies what you are going to do for

the

Landlord and contains a hold-harmless clause.

III. Rental Listings

B. Open, non exclusive

•Not recommended

•Often not in writing

III. Rental Listings

IV. Leasing ProcessA. Screening tenants • Key word --- Consistency!

Have ALL applicants follow the same process.

• MAR - Prospective Tenant information

form - attached

1. Personal credit report – only with written

authorization. ($10.00 fee per adult - paid by

tenant)

• C.O.R.I. reports --- ???

IV. Leasing Process

A. Screening tenants – continued…2. Fair Housing/rental concerns – refer to handout

3. Check tenants prior rental history – 2 landlords

back!

4. Check employment history, salary, continued

employment…

-- general rule of thumb – 25% of income to go to rent

5. Landlord meets tenants personally.

-- I always try to check out where they currently live.

IV Leasing Process

B. Environmental

1. Lead Law

a. Tenant Lead Law Notification - attached

-- sign two copies, give one to the tenant

b. Tenant Certification Form - attached

-- sign 2 copies, give one to the tenant

c. Provide tenant with copies of the most recent

reports, if any.

B. Environmental

Lead Law – continuedd.Duty to De-lead or encapsulate.

e.Cannot refuse to rent to a tenant because they

have children under 6 years old

f.May have to pay for tenants temporary lodging

during de-leading.

g.Financial assistance ($1,500 tax credit per unit)

on Mass state income tax.

IV. Leasing process

C. Preparation/Delivery of the premises1.Inspection by owner & agent. (take lots of pictures)

2.MAR Statement of Condition - attached

3.Abandoned property – return to tenant?

4.Board of Health inspection

-- a BOH sign off could act as a “violation free

baseline” if a tenant claims there are problems later.

IV. Leasing process

D. Safety & Habitability1. Warranty of habitability (heat, water, fuel, etc…)

2. State Sanitary code

a. maximum # of occupants

b. extermination – maintain free of rodents, insects, etc…)

c. Kitchens – sink, stove/oven, facilities for a refrigerator

d. Heat -- including fuel unless a written agreement.

e. Water – must pay for unless separately and properly

metered

IV. Leasing Process

2. Sanitary Code – continued…

f. Hot water

g. Structural elements – weatherproof, watertight, rodent

proof…

h. Snow removal – all means of egress safe and operable.

i. Garbage and rubbish

j. Smoke & CO2 detectors must be present and

maintained.

k. Locks – all entry doors (and windows) must be capable

of being reasonably secured against unlawful entry

and properly fitted with an operating locking device.

V. Leases

A. Written versus Oral

-- two reasons for written agreements

1. Oral agreement is only as good as the

memory and honesty of the

parties

2. Take advantage of explicit provisions

-- sublet, occupants, key, access

-- sanitary code ( who pays for heat?)

-- pets, smoking, etc…

V. Leases

B. Requirements for a valid lease

1. Offer and acceptance

2. Consideration

3. Capacity to contract

4. Legal objective

V. LeasesC. Types of Leases (tenancies)

1. Fixed term tenancy

-- written lease

-- date lease ends

-- amount of rent

-- what the rent includes

-- typically 1 year, but can be any other term.

** Standard Residential Lease - attached

2. Self extending lease

V. Leases

3. Tenancy at Will

-- “month to month”

-- either party may terminate by given notice in

advance at least one rental period or 30 days, whichever is

longer.

-- may be written or oral….writing provides much better

protection

*** MAR Tenancy at Will Agreement - attached

4. Subsidized Tenancy

V. Leases

D. Lease provisions

1. Quiet enjoyment

2. Water metering

3. Late payment penalties

4. Escalation clauses (taxes, heat, etc..)

5. Utilities

V. Leases

E. Lessor (Landlord) Access1. Limitations

2. Who may enter

3. Purpose of entry

4. Timing (statutory 24 hours?)

5. Key?

6. “Reasonable Notice”

V. Leases

F. Unenforceable lease provisions

1. Tenants waiver of rights

2. Landlord exemption from law

3. Limitations on children

4. Landlord “hold harmless”

5. Requirement of landlord “periodic access”

6. Cannot waive habitability

7. Landlord cannot transfer utilities without consent

8. Lessor reprisals

VI. Deposits

A. Maximum allowable payments

1. First months rent

2. Last months rent

3. Security deposit

4. Lock/key deposit

B. Illegal deposits

1. Cleaning deposits, pet deposits, reverse

penalties, timing of late fees, etc…

VI. Deposits

C. Security Deposits1. Property of the tenant

2. Separate account

3. Written receipt required 30 days *MAR receipt -

attached

4. Written Statement of Condition - attached

5. Interest payment required (5% or actual interest

received) on anniversary date.

VI. Deposits

D. Last months rent1. Written receipt required - attached

2. Required terms of written receipt

3. Interest required

4. Rate of interest

5. When interest is due

VII. Terminating tenancies

A. By agreement/fixed term lease

B. Terminating tenancies at will / 30 day or

rental period

C. Notices to Quit - attached

• 14 day notice to quit for non-payment

• 7 day notice to quit for other than non-

payment

D. Retaliation/self help eviction

VII. Terminating Tenancies(cont.)

E. Summary Process

F. Storing property/abandoned property

G. No Lockout without court order

VIII. Wrongful acts of Landlord

A. Dangerous conditions

B. Failing to reimburse for authorized

repairs

C. Failing to comply with housing codes

D. Demanding money for real estate taxes

E. Failure to make agreement clear and

simple

F. Depriving access without court order

VIII. Wrongful acts of Landlord

(cont.)

• Imposing interest for less than 30 days

late

• Failing to disclose late payment

sanctions

• Interference with quiet enjoyment of

tenant

IX. Vacation Rentals (two types)

A. Rentals for 100 days or less for vacation or

recreational purposes generally exempt from

many of the laws regarding residential rentals

B. Rentals for 31 days or less for vacation or

recreational purposes are generally exempt

from lead paint law requirements so long as

no chipping or peeling lead paint exists in the

dwelling unit and the tenant has received the

short term vacation rental notification.

Rental Wrap Up

Taking the Rental Listing

• Exclusive Right to Lease

• Setting Expectations of Landlord

• Tenant Lead Notification form

• Where to market Rental Listings

• Offering of Compensation

• Following legal guidelines in ads

Working with Tenants

• Charging a fee for locating a rental

for a tenant

• Proper treatment of tenants – equal

opportunity

• Forms/documents to assure tenant

receives

Processing the Applications

• Completion of Applications

• Running Credit and Fees for doing so

• Calling of References

• Rejection or Acceptance of Applicants

• Documentation of Activities

• Security of Documentation

Processing the Applications

• Signing of the Lease

• Positive ID (license) at signing of

lease OR if tenant declined and

requests credit report

• Bank check for monies (if close to

tenancy) – to assure funds are

secure

What your Landlord Needs to Know

• Lease vs. Tenant at Will

• Collection of Up Front Monies

• Section 8 and Discrimination

• Proper accounting of Last Months

rent and Security Deposit

• Security Deposit Enforcement

Summary

• Rentals can be a good source of

additional income

• Rentals can be another source of

Liability

• Practice Carefully……

• Tenants some day become Buyers!

More Information

• Landlord Rights and Responsibilities

Tenants Rights and

Responsibilities

• MAR Hotline (through your Manager)

More Information

• 1. Legal Tactics: Tenants’ Rights in Massachusetts by Annette Duke (writing from a tenant’s perspective). Published by the Mass Law Reform Institute

• 2. The Massachusetts Landlord Survival Guide, Seventh Edition by Philip Lapatin and published by the Greater Boston Real Estate Board

• 3. The Successful Landlord  by Maribeth Perry published by the Central MA Housing Alliance Inc.

• 4. Landlords' Rights and Duties in Massachusetts, Joseph P. Diblasi

Links

• http://www.mass.gov/Eoca/docs/LandlordRights.pdf

• http://www.mass.gov/Eoca/docs/TenantsRights.pdf

• http://www.mass.gov/Cago/docs/Consumer/LandlordTenant073007.pdf

• http://www.gis.net/~groucho/landlord.html

• http://www.massrha.com/

Landlord Organizations & SupportMassachusetts Rental Housing Association•Worcester Property Owners Association

•Southern Worcester County Landlord Association

•MetroWest Property Owners Association

•Greater Lowell Landlords Association

•Eastern Middlesex Property Owners Association

•Lawrence Landlord Association

Great for Agents TOO!