Law Outside the Box

As many of you know, I have managed rental property for several years in addition to my duties as an attorney. This firsthand experience dealing with landlord-tenant issues has proven to be invaluable when it comes to understanding the needs of my property management clients.

In previous posts, I described issues I had with my first roommate who subleased from me while I was renting. I explained problems relating to nonpayment of rent and failing to collect a security deposit. After these negative experiences, I didn’t know if I could ever handle the responsibility of being a good landlord if the opportunity ever arose.

Minnesota Multi Housing Association (MHA) offers a wealth of information for landlords

Several years later, early in 2006, I did get an opportunity to help manage rental property through a family business. My wife, who happens to work in housing, informed me about the Minnesota Multi Housing Association (MHA) and the resources they provide for landlords of all sizes. I would say if you are a landlord, you need to check out what MHA offers. Visit their website, contact their office or go to an upcoming event. I have attended many of their seminars over the years and gained a wealth of information to assist me in becoming a better property manager.

© Hassle Free Clip Art.com

In a previous blog post, I described to you my first experience renting. I had a roommate that was an old friend of mine who was subleasing from me. We didn’t have a writhe lease agreement, just an informal verbal understanding. I was going on faith that he would pay me his ½ of the rent and utilities each month. As I learned, I was wrong not to have a written lease to enforce as problems arose over the next several months.

When my friend moved in, I was naïve not to collect any form of security deposit. Again, I was going on trust that there wouldn’t be any significant issues. In addition to my roommate’s challenge with paying me his share of the rent and utilities, he brought with him another surprise…

As background, my roommate had his own room with a separate door to enter and exit the house. He used the sliding door constantly and excessively to the point that by the time he moved out, the door had been damaged beyond normal wear and tear.

Lesson: Always collect a security deposit to protect unforeseen renter issues

Because I hadn’t collected a security deposit from him, my options were very limited in terms of recovery when he did move out. In addition, as a tenant myself, I could have been held liable by the property owner for excessive damage even though it was my roommate who was responsible for the excessive damage. Thankfully, in this case that didn’t happen to me. But it served as a stern reminder that along with a written lease, I should have collected a security deposit as ways to protect myself.

I learned my lesson! Don't be someone else's pigeon!

As I’ve mentioned in previous blog posts, my first experience renting taught me a number of valuable lessons (at my expense unfortunately). My first roommate subleased from me and agreed to pay ½ rent + ½ utilities. We didn’t have a written lease and I didn’t collect a security deposit (damage deposit). Those were two big mistakes!

I would consider my roommate to be a bit of a party animal. He was the jock type and I had known him for a few years and suspected that maybe we’d have some small issues from time-to-time. But because I trusted him, I figured there wouldn’t be any big problems with having him as a roommate.

Squatters should not be welcomed guests if you are leasing

After my friend moved in, he would have one of his friends over on occasion, maybe once or twice a week. Within a couple months though, he was having a few more friends over and the frequency continued to increase. Soon enough, some of these friends were starting to spend the night hanging out with him in his room. In a way, some of these friends were starting to become almost squatters because they would stay at our place for several days at a time. They would bring their stuff in the house. They would use the shower and treat the place like it was their own.

A renter can be held liable for the damages caused by another renter or his guests

What I observed greatly concerned me after awhile because I suspected that if anything happened to the place as a result of their wild activities, I could be held liable to the property owner. I strongly suspected that at least one or two of these friends of my roommate had trouble with the law or some type of criminal record as well.

A written lease between a renter and the friend renting from him can reduce potential problems

My first mistake was not having a written lease at the outset to address problems that were concerning me. But I also erred in not being proactive to confront my roommate about the potential hazard this situation was creating for both of us and that I was uncomfortable with it. I even had to buy off one of his squatter friends to get her to leave the place after she had brought all of her stuff to move in and wouldn’t leave after 10 days. This was a costly lesson to me both in time and expense but forever changed how I approach rental situations. In my experience, you must have your lease agreement in writing to protect your own interests and you must be proactive about enforcing it. If you don’t take these steps, you could learn a costly lesson down the road.

© Hassle Free Clip Art.com

When I was in college (many years ago!), I was renting a townhouse. As part of my lease, I had the ability to sublease in order to defer some of the expense (rent and utilities) involved with renting. This was a great option because it afforded me the opportunity to choose who I preferred as a roommate if I wanted one.

Be careful if your roommate is also a friend

At that time, I had a friend who I’d known for a few years looking for a place to stay. Since he was a friend, I figured, “yeah, we can do this on a handshake – no problem!” As it turned out, I was very wrong. Many of you have probably been in this place and can relate.

Always have a written lease no matter the situation

Before he moved in, it had crossed my mind that maybe just maybe we should have something in writing. It is important to note that an oral lease would have been acceptable in this situation but enforceability of an oral lease is an entirely different matter. Our oral agreement was that he would pay me ½ rent + ½ utilities. It seemed like a reasonable way to go.

Don’t procrastinate when dealing with an ongoing tenant issue

The first couple of months were fine. However, it was soon apparent he had problems holding down a job and as I quickly learned, he had a lot of issues with creditors that I had no idea existed. This problem grew over the next few months. First, he started paying late - always coming up with excuses. Then, it got to the point where he was trying to avoid me because he was missing payments altogether. After about 5-6 months of this cat and mouse game, it became very apparent he was going to be ditching me soon. He was into me for a lot of money. Sure enough he left quickly one night.

A written lease is much easier to enforce than a verbal lease

I was left holding the financial end of this mess but I also learned a very important lesson. It doesn’t matter if your roommate is your best friend forever (BFF), if they aren’t under a written lease, you may be asking for trouble at some point. A lease isn’t required to be in writing if it is for a period of less than a year but I wouldn’t have anyone leasing from me without a written agreement.

Whether I am the landlord or the tenant, when there is an issue, make sure to Document the Heck Out of the Problem!

Here are a few tips:

1. Always have a camera ready. If there is photographic evidence when you move in, when a problem arises, if the problem persists and when you move out, you will go a long way to creating a photographic trail of evidence.
2. Always back up a phone call with an email or written correspondence. If you have made a phone call to the other party, make a written note of that phone call (when and where) and if it relates to an issue, send an email or better yet a written correspondence to the other party.
3. Always review the lease carefully. Indeed it’s true; the devil is in the details. Your rights and responsibilities are spelled out in your lease. Know what it says!
4. If it is a serious issue or an on-going problem, your written correspondence should be mailed certified. You could learn this the hard way in a courtroom if it is a serious enough issue and the sides end up there. Don’t be caught naked in front of the judge without a certified return receipt!
5. Don’t be afraid to get outside help! You’re always better off getting outside counsel if it is an issue that doesn’t seem to have a clear cut answer. Talk with your attorney or seek out free assistance from legal sources like Homeline.
6. Obtain a free copy of the MN Attorney General’s Landlord-Tenant Guide. Even as an attorney, I’ve found this resource to be remarkably useful.

Are there other tips that you would recommend or that you have found useful?