MA Real Estate CEU Course - Residential Rentals: Landlord/Tenant Issues_2-10-14
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Transcript of 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!