Horror stories of non-paying, destructive Tenants (and to be honest, less than perfect Landlords) are abound. Most of these stories can trace their roots to mistakes in the creation of the Landlord-Tenant relationship. This Article provides some of the most important considerations when establishing a new Landlord-Tenant relationship to help new (and even experienced) Landlords to avoid common pitfalls.
Use a Real Estate Agent: Seek an Agent who is a seasoned professional with experience in the rental market. A good agent will act as a screen, minimizing the risk of getting saddled with a crummy Tenant. While using an agent might cost a little more, the alternative prospect, usually from craigslist, is usually much worse.
Obtain a Credit Report: Your apartment is a valuable income-generating asset. Consider this: a farmer wouldn’t rent out her tractor without checking the creditworthiness of the person that she’s renting it to—and neither should you! Documented history of timely payment of debt is a useful indicator that the Tenant will make timely rent payments to you.
Get it in writing: This one is obvious, but not always followed. By setting the term of tenancy, the Landlord is better protected from a Tenant walking away. Further, by establishing the other terms in writing, there is less room for disagreement and the attendant, inconvenient litigation–imagine a Tenant that plans to operate a reptile sanctuary in your unit because the lease is silent on pets. Some areas to consider: snow removal, utilities, pets, subletting, and the time and method of rent payment. One more important thing to remember: after the initial period (usually one year), the tenancy will become what’s known as a “tenancy at will.” This legal phrase simply means that either the Landlord or Tenant can terminate the tenancy with 30 days (or however long the payment interval is, whichever is less) notice.
Streamline the Collection of Rent: The easier it is for the Tenant to pay rent, the more likely it is that the Tenant will make timely payment. There are several options here but there are two that best protect your interests. First, consider opening a bank account into which your tenants can directly deposit their rent. This should not be your normal operating account for security and accounting purposes. Most banks will provide deposit slips when opening a new account which makes payment by the Tenant even easier. Second, consider using an automatic rent collection service which automatically debits the Tenant’s bank account on a monthly basis. Fees for these services are generally low—often a matter of a few dollars per month. Quick note: if you decide to have rent mailed directly to you, consider renting a PO Box at your Post Office to protect your privacy and safety.
Only Request Legal Charges: Under Massachusetts Law, the only legal charges that may be required of a Tenant are: first month’s rent; security deposit to cover the cost of any damage to the apartment beyond normal wear and tear (which may not exceed the amount of one month’s rent); last month’s rent (the month that will turn out to be the tenant’s last one in the apartment); and the cost of a new lock and key for the apartment.
Hold the Tenant’s Money Properly: Technically, the Security Deposit is the Tenant’s money. All security deposits must be deposited in a Massachusetts bank, in an account that collects interest within the first month of the tenancy. The landlord must provide the tenant the name, address, and account number of the bank that holds the deposit. Each year, the landlord must either pay the tenant the interest on the security deposit or let the tenant deduct that amount from a rent payment.
Take Pictures—Lots of Pictures: Pictures represent a quick, inexpensive way of documenting the state of the property at the time the Tenant takes possession of the premises. Most of us carry a camera in our pocket–they can even make phone calls. Should a dispute about damage to the property arise, this proof may mean the difference between retaining the Security Deposit or footing the repair bill yourself. Along the same lines, make sure to keep a copy of the lease and any receipts for any deposits (you should provide copies of these items to the Tenant as well). It’s a good idea to keep records of all documents that are relevant to the tenancy. Unless we’re talking about Al Capone, it’s rare for someone to say: “Man, I wish I didn’t keep such thorough and detailed records!”
While these tips are a great place to start, the help of an experienced real estate attorney will help to start your landlord-tenant relationship on the right foot. A landlord who is willing to do the due diligence, no matter how unpleasant or boring as it may seem, at the start of the tenancy is the landlord who can avoid more of the horror stories that we’ve all heard.
Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.
Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.