Monday, November 17, 2014

CALCULATING SECURITY DEPOSIT DEDUCTIONS

It can be a daunting or uncertain task…assessing deductions to a renter’s security deposit.  There are security deposit laws specific to each state, so you should check the rules and regulations that pertain to your specific location. In most states, you cannot charge your resident for normal wear and tear, but are able to cover your expenses for damages caused by the resident.

This list contains examples of what would qualify as normal wear and tear, which you, as the property owner, are financially liable to repair:

  • Faded curtains, carpet, wallpaper or paint due to age or sunlight
  • Wear on rugs/carpet (especially in high-traffic areas) due to normal use
  • Minor scuffs on floors or trim
  • Broken plumbing as a result of daily use
  • Broken appliances that are not the result of misuse
  • Warped doors and windows caused by moisture, temperature or age
  • Small nicks on walls (especially in corners)
  • A reasonable amount of holes in the walls due to the hanging of pictures
  • Broken seals on doors or windows
  • Caulking
  • Mold or mildew mitigation (if not due to negligence of resident)
  • Replacement of batteries or bulbs for lights and smoke detectors
This list contains examples of what would qualify as damage to the property, which the resident could be financially liable to repair:

  • Stains on the curtains or walls that were not previously present
  • Ripped, stained or frayed carpets/rugs
  • Major scratches or gouges to floors or trim
  • Broken or cracked tile
  • Clogged drains and toilets due to misuse
  • Broken appliances, plumbing or fixtures that are the result of misuse
  • Broken doors or windows, including torn or missing screens, blinds, locks and hardware
  • Damaged drywall, including excessive holes from hanging pictures
  • Broken shelving or cabinetry
  • Extermination of fleas or pests
  • Cleaning of excessive filth, trash, mildew or mold
  • Unauthorized tenant alterations to rental
  • Loss income during rental repairs (within reason)
  • Depreciated value of the property due to destruction
Back-owed rent, fees or unpaid bills may also be deducted from the security deposit.

Your resident may also be financially responsible for failing to report issues that result in damage to the property. In order to avoid at least partial responsibility for these issues, however, the landlord must have conducted reasonable inspections during the occupancy.

It is important to remember that you need to notify the resident of exactly which items were damaged or needing repair. Provide your renter with a clear list of repairs and even a copy of any receipts. A sample checklist which itemizes conditions upon occupancy and departure from the property, can be found through the following link: Tenant Move In Move Out Inspection

Offer to inspect the unit a few weeks before move-out so that the renter can have the opportunity to repair some of the damage themselves. This can save you some time and effort though a second inspection to confirm completion and quality of work, plus verification that there has been no further damage, is highly advisable.

When calculating the resident’s financial responsibility for repairs bear in mind these two key points:

  • It is not legal to charge your residents for upgrades to the property.
  • Assess damages with an understanding for depreciation in value
It is important to take into consideration the quality, age and prior condition of the damaged item and then calculate the resident’s financial responsibility based on that data. For example, if a rental unit had a new laminate counter in the kitchen and at the final inspection it was discovered that the surface was marred by a large burn, then the resident would be responsible for the entire cost of replacement. (The item was new at move-in and destroyed at move-out.) The landlord could upgrade to a marble countertop but could only charge the resident for what would have been the cost of replacing the laminate counter.

In order to calculate fees when depreciation is a factor, consider this example: Upon final inspection it was discovered that there was irreparable damage to the carpet. The carpet was of a quality manufactured to have a lifespan of 10 years and was 6 years old at the time of occupancy.  The resident is responsible for paying 40% of the replaced carpet expense (which is the percentage equal to the remaining expected lifespan). The replaced carpet value would need to be calculated based on carpet of equal quality to the carpet that was present at occupancy.

If you are not sure what a fair value is for a specific repair, consult with an experienced contractor.

This article is intended as a starting point to help guide you toward a fair and honest assessment of security deposit deductions. There are specific laws in place for each state, and these should be researched before any deductions are applied.

For more rental property information refer to our website: www.eRentalServicesInc.com 

Wednesday, October 22, 2014

$80,000 SETTLEMENT IN HOUSING DISCRIMINATION LAWSUIT

The Justice Department recently announced that a settlement was reached with the owners and operators of an apartment community in Fremont, California.

The lawsuit challenged a policy upheld by the complex which prohibited children from playing outside in the common grassy areas. It was argued through this litigation, that the actions of the defendants constituted a pattern or practice of discrimination against families with children residing on the property.

Complaints were filed with the U.S Department of Housing and Urban Development by 5 families who claimed to be negatively impacted by the apartment policy. HUD investigated allegations and then issued a charge of discrimination against those responsible for initiating and maintaining the policy.

“Federal law guarantees families with children the right to equal access to housing, including full access to their homes’ amenities and facilities,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “Settlements such as this one help ensure that all families can enjoy that right.”

The defendants will pay $77,500 to the victims of their discrimination, and $2,500 to the government as a civil penalty. Additionally, they will be required to implement a nondiscrimination policy, establish new enforcement procedures for rule violations and undergo training on the Fair Housing Act.

As a property owner, is important that you are familiar with the laws surrounding the rental industry. Please refer to our website (www.eRentalServicesInc.com) or contact our office in order to obtain more information on best practice for resident screening and how to stay in compliance with the federal Fair Housing Act.

Source: United States Department of Justice, Office of Public Affairs; http://www.justice.gov/opa/pr/2014/July/14-crt-785.html

Friday, October 3, 2014

EEOC CRITICIZED FOR RECOMMENDATIONS

Guidelines put into effect in 2012 by the Equal Employment Opportunity Commission have recently come under heavy scrutiny in front of the House Subcommittee on Workforce Protections.

The guidelines are supposed to safeguard employees from workplace discrimination, however, many argue that they are doing a great disservice to employers.  Not only has there been significant uncertainty about what is considered to be justified pre-employment screening, but employers are now caught between two bleak options. They either risk EEOC violations by thoroughly screening potential employees, or limit their screening and increase the risk for employing a criminal. Either may have devastating results for their company.

Rep. Tim Walberg, R-Mich., has said that these guidelines not only hinder the employer but could have a negative impact on the overall community: “In certain occupations, a background check of prospective employees is critical to public safety.”  These concerns are especially apparent when hiring employees that will be entering private residences or working with children.

Additional complaints were voiced concerning inconsistencies in the EEOC’s approach to investigation and enforcement of discrimination allegations. This seems to be exemplified by recent losses during court cases where the EEOC has challenged an employer’s use of background screening.

Though nothing in the 2012 guidelines prevents employers from conducting criminal records screening during pre-employment, they are supposed to distinguish instances where such screening is appropriate. Unfortunately, confusion and uncertainty are marring the outlined path and have created an unstable foundation for business looking to hire responsibly.

To follow this topic and access other useful screening resources, visit: www.eRentalServicesInc.com

Tuesday, August 19, 2014

HUD TO PROVIDE FURTHER GUIDANCE ON DISCRIMINATORY EFFECTS IN RENTAL HOUSING

In February of last year, the US Department of Housing and Urban Development (HUD) issued a Discriminatory Effects Final Rule to formalize a national standard for determining Fair Housing violations.

“Through the issuance of this Rule, HUD is reaffirming its commitment to enforcing the Fair Housing Act in a consistent and uniform manner,” said HUD secretary Shaun Donovan. The Fair Housing Act prohibits housing practices that result in disparate impact on a group of persons because of race, color, religion, sex, handicap, familial status or national origin.

The practice of running criminal background checks on potential tenants may now be prohibited under the Discriminatory Effects Standard Final Rule.

Many in the rental housing industry have expressed serious concern over the final rule, specifically, the limitations placed on tenant screening. Criminal background checks provide some level of assurance that measures are being taken to uphold resident safety and viability. By restricting a property owner’s right to screen an applicant’s criminal history, this new rule would seem to dramatically increase the property owner’s risk for liability. 

A property owner can be held liable for crimes committed by their tenants as criminal activity has a negative impact on the other residents and the surrounding community. The best way to reduce the likelihood of criminal activity and to convince a judge, if necessary, that all reasonable steps were taken to prevent such activity, is to perform a thorough background check on all potential residents prior to their moving into the community.

It presents a large problem for property owners if they are not allowed to perform criminal background checks and are then held liable for a resident’s criminal activity.

Acting Assistant Secretary for Fair Housing, Bryan Greene, has stated that HUD is working on outlining additional guidance for impacted industries. Operating guidelines could be released as early as this summer and would more clearly define what qualifies as “unjustified” discrimination, including information pertaining to criminal background screening.

Visit www.erentalservicesinc.com for more information as it becomes available.

Thursday, July 31, 2014

HOW TO AVOID A HUGE MOVE-IN MISTAKE

The function of a security deposit is to provide some assurance that a tenant will return a rental property to its original state (or pay for any necessary repairs). However, one common mistake will diminish the property owner’s ability to apply deposit deductions.

Let’s say that you have a verbal agreement with a tenant that, as landlord, you will repair a garbage disposal, clean the carpets and apply a fresh coat of paint to the bathroom. The soonest that these repairs can be made is one week after the desired move-in date. Upon occupying the unit, the tenant takes photos which highlight its current state of disrepair. You just lost the ability to collect full reimbursement for damages from the security deposit. When the lease expires the tenant has a justifiable reason to refuse deposit deductions, as they can fairly argue that they returned the unit to its original condition. You may very well have upheld your verbal agreement, and the tenant benefited from the repairs made to the unit, but under these circumstances a judge will rarely be swayed to demand reimbursement for damages.

Do not allow a new tenant to move-in to a rental unit until it is cleaned and repaired as needed. Conduct a walk-through with the tenant and itemize a move-in/move-out agreement. This agreement must contain language as required by the Warrant of Habitability Law and should be signed by both the landlord and tenant prior to move-in (and then again during the walk-through at move-out). Keep the agreement, and any photos of the unit, with the lease contract in a safe or locking filing cabinet.

RSI provides access to many such documents for rental property owners. To download a standard Move-In Move-Out agreement, select the following link: Tenant Move In Move Out Inspection

For more information visit our website at www.erentalservicesinc.com

Tuesday, July 1, 2014

CITIES WHERE RENTING IS SMARTER

In some markets it is more logical to rent than to buy a home. Due to the amount of time it would take to break even on a home investment, and considering median home prices as compared to average rent amounts, some cities offer the more affordable option to the renter.

 If you do not plan on staying in a given location for at least 2.5 years, you should consider renting…especially if you are living in one of these cities:

-San Jose

-Seattle

-Denver

-San Francisco

-Colorado Springs

-Phoenix

-Mesa

-Minneapolis

-Albuquerque

-New York

-Boston

-Virginia Beach

-Washington D.C.

-San Diego

-Honolulu

Information sourced from Zillow. Please visit www.erentalservicesinc.com for more useful rental and property management resources.

 

Monday, June 16, 2014

U.S. AND THE SMART SEAT

The talk around the table is that Apple and Google are impressed by the future investment possibilities and development of the smart home. Apparently, we will not have to wait long for this addition to our high-tech lifestyle (at least in part) as the smart bathroom has arrived in the U.S. 

American Standard, which is owned by Japan’s Lixil Corporation, is adding a line of smart toilets. During an interview with The Wall Street Journal, Lixil’s Yoshiaki Fujimori stated that they expect interest in this product to grow quickly and have set aside a $3-5 million ad campaign budget to help push the trend forward.

Smart toilets are already installed in three-quarters of Japanese homes. These high tech thrones boast the ability to sync with the user’s smartphone, play music, warm to desired temperatures, cycle through various cleaning functions, automatically flush and yes, ladies, the seat does put itself down (FINALLY!)

This could be the next big feature to introduced into the rental housing market. What smart amenities does your property boast?

Visit www.erentalservicesinc.com for more rental property information.

Link to Original Article

Monday, June 2, 2014

TIPS FOR SETTING YOUR RENT AMOUNT


In a perfect world, your rent amount would cover all of your expenses for the property plus allow you to claim anywhere from 1-6% of the rent as profit.

Higher rental prices convey status, but prices that are too high will drive renters away. Similarly, if your rent is set too low, interest will wane due to the assumption that the unit must be unfavorable. The key to successful price-setting is finding that middle ground, ideal for the current rental climate.

Here are some tips to help calculate an appropriate rent for your property:

1.)   Know your monthly expenses for the property. This should include any mortgages, loans, the average costs of maintenance or repairs, advertising fees, vacancy costs, screening or legal fees.

2.)   Look in local newspapers and online advertising for properties that are similar to your rental property, and within a close geographic area. If you track these ads for several weeks, you will see patterns arise among the properties that rented quickly and those which did not. You will also be able to note any changes in asking prices. Identifying properties that rented within the shorter time range or adjusted price point, will give you a good idea for what is a reasonable asking price in the area.

3.)   View available units in your area, compare features, and ask the landlord about the level of interest they have seen with the current price.

4.)   Adjust your price based on the amenities available. Convenient location, favorable views, good parking, updates, square footage, floor level (upper level units are, generally, more desirable), closet space, etc. may all be cause to increase the price.

5.)   Remember that you will not set the price for your property and then leave it unchanged, for the duration. By watching the market in your area, you will be able to adjust your pricing appropriately, and maintain high demand for tenancy.

A rent amount that provides market supported profit for property owners, is not evasive or difficult to obtain. By following the above tips and remaining open and aware of changes in the local market, you should have great success.

Visit our website: www.erentalservicesinc.com for more information.

Friday, May 16, 2014

USING RENTAL CRITERIA TO AVOID FAIR HOUSING VIOLATIONS

The violation of Federal Fair Housing laws can result in the loss of thousands of dollars in both civil and punitive fines, in addition to the repercussive expense of legal fees and the phenomenal expenditure of time and effort that is required of any court process.

Fair housing claims occur commonly as a result of the resident screening process, but that need not be the case. One easy way to avoid Fair Housing violations is to establish clear (written) rental criteria and then to consistently follow those criteria.

TIPS FOR ESTABLISHING RENTAL CRITERIA:

-Occupancy guidelines: In general most follow the 2 people per bedroom or the 2 people per bedroom plus 1 rule. This is not a hard rule, however, and the layout of your property may mean that it is appropriate to allow fewer (or more) occupants.

-Income to rent ratio: The industry standard is that an applicant must make 3 times the asking rent amount. This ratio is considered to offer good assurance that there are enough funds available to pay rent and live comfortably. This ratio may be adjusted depending on the area in which you are renting and what you feel is a reasonable expected income.  RSI also recommends using an income to rent ratio which includes debt. Applicants should have at least ¼ of their income remaining after accounting for any monthly debt and your rent.

-Credit history: Consider credit scores (averages are available for specific states), bankruptcy records (for example, you may want to deny tenancy if they have had a bankruptcy in the last 2 years), amount of delinquency or collection accounts. RSI offers a pass or fail product that streamlines this whole process for you; providing a clear outline of your specific requirements for you to present to your applicants.

-Criminal history: This is not a protected class, however, given recent discussion around disparate impact, we recommend that you be as clear and consistent as possible when establishing criminal history criteria. You may want to utilize a general statement such as “tenancy will be denied for any criminal history which, had it been conducted on the property, would have been a threat to the property, its residents, or the community”. Other options include, denying based on the severity of the conviction (no felony convictions, for example) or the amount of time that has passed since the conviction. Bear in mind that each state has its own limitations on reportable criminal history, and you may be limited as to how far back you are legally allowed to consider convictions.  Also, note that you should never base your decision on arrest records but convictions alone.

-Rental history: You may require that the applicant provide rental history for a given period of time (2 years). Generally, we would recommend verifying rental history with the past 2 property owners in addition to checking for any evictions. It is a known fact in the industry that once a person has had one eviction they are more likely to have another. Consider a rental criterion that denies tenancy for balances left owing, judgments, or evictions.

-Pets: Establish if pets are allowed on the property and if there are limitations on the type, number or size. Any additional deposits or fees should also be noted. Service and companion animals fall into a separate category and are exempt from these additional fees.

-Smoking policy: This has become a very popular (and important) issue in the rental industry given recent legislation. Be very clear about your smoking policy. A no smoking property would mean no smoking (of any kind).

-You should outline the application process, application fees, deposits, and required identification. Some states have fee caps in place or require that you charge only the actual amount of the background screening. Be sure to confirm what regulations are in place for your specific location.

-Clearly state that you adhere to all applicable fair housing laws.

It is important that you keep good records on each inquiry from prospective residents. Implement a log or system with utilizes guest cards to track relevant information such as date/time of showing, property shown, prospective move-in date, etc. in addition to any calls received or made. Also, keep records on any changes to property availability. 

Applications received need to be kept for a minimum of 60 months, even if that applicant is denied tenancy or does not end up renting the property. Adverse action letters should be sent to any applicant denied tenancy. These letters are available on our website.

RSI is happy to discuss any questions you may have about establishing best resident screening practices. Call us at 1-800-628-6414 or visit our website www.erentalservicesinc.com for more information.

Friday, March 28, 2014

CHILD INTENTIONALLY SETS HOUSE ON FIRE -LANDLORD ALSO BEING HELD LIABLE

A 5-year-old boy revealed to investigators that he intentionally set fire to his home with a lighter Sunday night. He, his mother, and two other children escaped the blaze but his 2-year-old cousin died of smoke inhalation in an upstairs bedroom.

Children under the age of 10 cannot be prosecuted for homicide in Pennsylvania, but the boy will be evaluated by Children Youth and Families and court proceedings may result in his being removed from the family.

According to Stephen A. Zappala Jr., the Allegheny County district attorney, the landlord had likely violated local ordinance by not maintaining or providing smoke alarms in the rental property. The scene was reported by firemen and neighbors to have been silent, with no alarms sounding at the time of the fire.

Mayor Michael Cherepko said 60 percent of the houses in McKeesport are owned by absentee landlords and that many of those landlords allow their properties to fall into a state of disrepair. His administration is working on a plan to better enforce local ordinance through the occupancy permit process.

We in the rental industry are all very aware of the many associated tasks and daily responsibilities that may, at times, feel burdensome. It is after tragedies like these, however, where it becomes abundantly clear that dire consequences can result from our negligence.

Visit www.erentalservicesinc.com for more information and resources pertaining to rental property ownership.

Article Source: http://www.post-gazette.com/local/region/2014/03/27/5-year-old-boy-set-fatal-fire-Allegheny-County-DA-says/stories/201403270295#ixzz2xH6zNmEd

EVICTION AND THE DISPOSAL OF A RESIDENTS PROPERTY

It may appear that your resident has permanently surrendered possession of your rental unit…they have moved the majority of their belongings and returned the keys. If any personal belongings of sentimental or monetary value have been left behind you should use caution before cleaning out the unit for re-rental. The legal parameters regarding the disposal of personal property can often seem vague and confusing to property owners when applied to real world situations. Here are a few helpful points to bear in mind:

There are regulations in place to protect the rights of the resident (making a “lockout” illegal). The statutes allow for removal of property under certain, specific circumstances, however, the only way to guarantee that there can be no legal claims against you as the landlord is to go through the eviction process and have a writ of restitution executed by a sheriff.

To avoid having to go through the eviction process simply to remove any abandoned belongings, you may get the resident to sign a Waiver of Abandoned Property upon vacating. This document states that the resident has left the unit and is willing to waive all rights to any property left behind. With the signing of this type of document, you could cancel any pending eviction and have some security in reclaiming the rental property.

For more information and useful resources pertaining to rental property ownership, visit our website: www.erentalservicesinc.com

 

Thursday, February 13, 2014

THE RENTAL INDUSTRY AND LEGALIZED MARIJUANA: CASTING LIGHT ON PROPERTY OWNERS COMMON CONCERNS


Recent changes to Colorado law have created a ripple effect through many local industries. Amendment 64 legalized the recreational use of marijuana and blurred policy boundaries that were once clearly defined in the rental industry. As a result, there is some confusion over how to best install and maintain appropriate rental policy standards.

Here are a few quick facts that are sure to help:

  • Both Federal and Colorado law give power to the property owner to determine rental property policy.
  • A smoke-free policy is still enforceable and can include prohibiting the use of marijuana.
  • Updating policy documentation to specifically reference use (or non use) of marijuana is recommended.
  • Property owners may still require drug testing as a condition of employment
 
According to Amendment 64, “nothing shall prohibit any person who owns or controls a property from prohibiting or otherwise regulating the possession, consumption, use, or growing of marijuana on that property.”

The struggle that the rental industry is going to face will involve enforcement of property policy. It used to be that because smoking marijuana was illegal, calling the police provided a quick and reliable resource for policy enforcement. With the change in Colorado law, police involvement is no longer a viable option. (The resident is breaking property policy but not the law.) Furthermore, court processed evictions for marijuana violations, have the potential to be less successful with a lack of police documentation and testimony.

A secondary issue facing property owners is that there may be an increase in marijuana growing operations (with intent to distribute). This would, undoubtedly, cause problems for a property owner, not the least of which are legal violations; damage to property; and the potential for increased violence in the community.

There are few easily ways to identify grow operations:

  • Blocked windows
  • Excessive bright lights
  • High levels of condensation
  • Consistent humming sound
  • Hoses running from inside house to outside
  • An odorous smell
  • Roof has no snow or frost (when neighboring properties do)
  • Frequent complaints from other residents that there is low water pressure, power surges, or spikes in utility usage
To smoothly navigate rental property ownership post Amendment 64, we recommend the taking of three key steps: create a clearly outlined rental policy reflective of the new laws, communicate expectations with residents and maintain active supervisory diligence.

For more useful property ownership information please visit our website at: www.erentalservicesinc.com

Thursday, January 16, 2014

RSI ROLLS OUT ANOTHER LAYER OF SECURITY

Keeping information secure is vital. We have recently implemented a new layer of defense to our already solid security platform.

 Multifactor Authentication (MFA) makes it more difficult for an unauthorized person to enter our system and access sensitive information. This multi-layered approach requires a combination of two independent credentials: a knowledge factor (something that only the authorized user should know) and a possession factor (something that only the user has access to).

 If you are not already using MFA…you should be! We will be contacting clients in the coming months to get you on-board with our new authentication system.

 What to expect as you begin using the new system…

 You will notice a change when accessing our website only during one of the following:

  • When you login for the first time under the new criteria
  • When you login from a different (unknown) computer
  • When your login from a different  IP address
  • When you login from a different internet browser
  • Every thirty (30) days
In the instances above, in addition to entering your username and password (knowledge authentication) you will be asked to also enter a key code which will be sent automatically to your email address (possession authentication).

 With the addition of this layered defense we are able to offer assurance that RSI continues to provide the best service to our clients. Most importantly, in turn, you are able to offer assurance to your applicants that their information is being stored under the highest security standards.

 As always, we will be here for you through this process. Please feel free to contact our office at 1-800-628-6414 or visit our website for more information (www.erentalservicesinc.com)