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June 22, 2008
Renters - How Do You Manage Them?
Here is a suggestion from a reader.
"We're a small 10-unit complex and 3 of them are rentals. The renters are often annoying, loud, and are smokers. While the owner occupied units are quite, mellow, non-smokers.
I lived in Germany and there HOAs can actually be on an approval-type board for all rentals. Meaning, if you rent your condo out, the HOA has a say in who you rent to. Usually this is by submitting the rental applications to the HOA board...and agreeing with the owner on who the best for for the condo-community would be. We actually have the additional problem that the owner's of the rental units never bother to show up to our HOA meetings....
I'm the president of our HOA, and I'd LOVE to enact something like this. But is is legal? Are there any precedents in CA of anything like this?
Would be great to read a blog post about this."
My answer is this. Obviously, the better renters are screened, the more likely one is to end up with a good tenant. But should the HOA assume responsibility for the screening? That is really the question here. I often am asked by an HOA Board, when updating the documents, "Can't we add a screening or eviction option to our governing documents?" My response is along these lines:
Yes, an HOA could set up some screening requirements and an eviction clause, but why would it want to do that .... other than hoping for better tenants of course? My concern is that the flip side of the HOA doing the screening or eviction is that it would most likely alleviate the owner of the unit from all responsibility, and possibly most if not all legal liability for tenant issues and problems. I can hear it now ... All the owner would have to say to the board is: "You have the option of screening and eviction, you can choose the tenant, and more power to you. If you screw up I can sue you, instead of you suing me. and, if you turn anyone away, and the place does not get rented because of it, I will seek the losses from you."
Have you noticed? California is the "Land of Entitlement"! (As opposed to the "Land of Enchantment" - which was the NM license plate ad for many, many years.) There are many people who shirk responsibility, pass it on, blame others, etc., and there are many people who can and will sue at the drop of a hat ... don't even ask me how many lawyers there are in this state hungry to take the cases. And Board members are volunteers. Aren't your jobs hard enough already?
So I ask you, what Board wants to step into the shoes of the landlord/ owner and do his or her job? What Board wants to assume the responsibility and liabity for choosing tenants? What volunteer Board knows all the ins and outs of renting property and what questions can and can't be asked, how to avoid discrimination claims? How many know that turning away potential tenants because of gender, sexual preferences (such as gay couples), children (meaning families with), and/or source of income (such as Section 8 tenants) can lead to expensive lawsuits? Who is the deeper pocket, the HOA or the individual owner?
Yikes, Boards .. once you know these things and think about them, I assume that you will get my gist. I never recommend that the HOA take over any owner/tenant situation in a manner that arguably lets the owner off the hook. I always recommend that the Board address the problems the tenants are causing, and at the same time keep pressure on the owners to do something about it too, through demands, fines, seeking reimbursement of costs, etc.
I also often suggest that the HOA could do some things that would help owners be better screeners, such as suggesting, by way of newsletter or otherwise, and some of the simple things:
1. Have the tenant complete an application with their personal credit and bank information. If they are unwilling to do so, they are not familiar with common leasing requirements of apartment complexes.
2. Get a property manager if you live out of the area that will check credit references, or do it yourself.
3. Encourage owners who rent their units to put clauses in their leases that say any violation of the association governing documents or rules is, at the option of owner, grounds to immediately terminate the lease.
4. Encourage owners who rent their units to put clauses in their leases that make the tenant responsible to owner for any fines or penalties or costs that are incurred by owner because of tenant's violation of the assocition governing documents or rules.
5. Let owners know that if they have a Section 8 tenant coming in, that the lease contract provided by the Fair Housing Department does not include the extra clauses mentioned above, so they should have a separate agreement on this with the tenant.
I have had rental property over the years and this is my tactic. I do not like to go to the trouble of checking credit, etc., and rely alot on instinct and how the tenant responds to my questions. So one thing I always say is I have an application I require that provides me with your bank and personal credit information, and references. I tell tenants I will be checking references and credit, and that I would prefer they tell me now if there is anything or any problem that might come to light through that process. I tell them that I would think of them more positively if they were honest with me up front instead of waiting to see if something shows up on the credit report or through checking with references. My experience with this is that the person either clams up (not a positive sign to me), says nothing will show up derogatory and they are sure of it, or they tell me everything that could show up and explain why.
Although I always require a credit app (for my own protection should the tenants trash a unit), I have never had to send any credit app in. I always got my tenants through sensing who was the most honest of the applicants by how they respond to that. I have never had a bad tenant.
Anyway, owners can do a good job of screening, ... if they want to, and even when a good effort goes south, owners can protect themselves with a good lease and "out" clause for any tenant that gets into trouble with the HOA rules. And in my book, the owner is getting the benefit of the rent (the HOA is not), and the pressure should be put on the owner to take care of any problems. The minute the HOA steps into the middle of that relationship (tenant/landlord), a new can of worms is opened.
Now I know someone is going to say ... what if the owner does not do anything ... or what if the owner cannot be located ... or lives a million miles away ... or is an abused elder relative .... or ... oh well, you get the picture. This is for a later blog!
Posted by Beth Grimm at June 22, 2008 1:47 PM