Good Tenants are Valuable to Landlords

Good Tenants are Valuable to Landlords

Robert Griswold | Steven R. Kellman | Ted Smith
06-Dec-1998 Sunday

This column on issues confronting renters and landlords is written by Certified Property Manager Robert Griswold, host of Real Estate Today! (KOGO Radio, 1 p.m. Saturdays) and by attorneys Steven R. Kellman, director of the Tenants' Legal Center, and Ted Smith, principal in a law firm representing landlords.

Q: I've heard horror stories about 20 percent rent hikes and apartment managers refusing to offer one-year leases. Is there anything I can do to protect myself in today's volatile rental market?

A: Griswold: Yes, you can seek landlords who still realize that a quality tenant who takes care of the rental property, and who pays rent on time, is worth his or her weight in gold.

This is not to say that rent increases are always unjustified. There are many landlords who want to raise rents to offset genuine increases in their costs.

I am concerned about unscrupulous landlords who aggressively are pushing the envelope in today's market. I believe these greedy types will get burned by failing to realize that collecting the top rent in the market is a poor substitute for stable, long-term tenants.

Look for a long-term lease, and to make yourself even more desirable, offer a set rent increase after a certain period.

Kellman: Rents indeed are going up. Landlords have been waiting for more than five years for an upturn and are enjoying it. Some say they are merely catching up to where the rents would have been had they routinely been raised each year.

It is wise not to raise rents too much too soon since such a shock may force good tenants to move and new, less desirable tenants to move in.

You should know, through reading the ads, the rental prices in your area. If the landlord proposes an increase, you may point out that the raise is too high for the area. Most landlords are simply trying to put their rents at the market level but may unintentionally overestimate the market.

Another approach is to have an agreement not to raise the rent for a set period. This does not have to be in the form of a lease but may be part of a month-to-month agreement.

For example, your landlord may simply agree that in your month-to-month tenancy, he or she will not raise the rent for 12 months. This is not a lease but it does lock in the rent. Landlords who shy away from a lease may agree with this alternative for a valued tenant. A win-win situation.

Smith: I disagree with those who say San Diegos' rental market is out of control. There is nothing volatile about today's market. Landlords have paid dearly for the downturn in the real estate market earlier this decade, and many lost buildings to foreclosure. The market has turned so owners today are able to recoup a decent return on their investments.

Despite what you read or hear, the vast majority of landlords are not gougers and want long-term residents. Frequent turnovers of units are not in either the landlord's or tenant's best interest.

One-year leases are out there; you may just have to look a little harder. Remember, in California, there is no upper limit on the amount or frequency of rent increases so long as proper notice is given. The apartment manager is not legally required to offer one-year leases. A month-to-month agreement or six-month lease sometimes is a reasonable alternative.

Q: We rented a home for a couple of years before moving out recently. Our agreement stated that the owner paid for the gardener and we took care of the bimonthly water bill.

After we moved, our security deposit report had deductions for the last month's water bill and a $250 deduction for firewood. We were going to pay our share of the closing water bill but I object to the owner just automatically deducting it.

The firewood had to be removed from the property due to a severe rodent infestation, which I handled personally at no cost or inconvenience to the owner. Are these deductions reasonable?

A: Griswold: The majority of disputes concerning security deposit dispositions occur due to a lack of communication.

It appears that you expected to pay for the water bill and if the owner had provided you with a copy you would have paid it directly or mutually agreed to have the amount deducted from your security deposit.

Either way the result would be essentially the same, thus I feel that the water deduction is reasonable.

The $250 deduction for the firewood also seems to be the result of poor communication. If you had advised the owner in advance before you removed the firewood, he would either have expressed his concern or agreed that it was necessary to remove it.

Since he is charging you, I assume that he was not notified or had forgotten he approved your disposing of it.

At this point, you need to contact the owner by phone or in writing to formally demand the return of your full deposit. Obviously, if the firewood was the source of a rodent problem, it would have been the owner's responsibility to address the problem, and your action saved him from dealing with it.

Q: I have been a landlord for many years. Recently I heard advice on Mr. Griswold's radio show that it is not a good idea to charge the tenant first and last month's rent plus a small security deposit. Can you explain this further?

A: Griswold: While clearly the custom and practice for many years has always been to collect "first and last month's rent plus security", it is not a good idea to allocate the funds in this manner.

It may seem like merely a case of semantics, but it can be an important distinction. I recommend that you collect the first month's rent, plus a larger security deposit (equal or larger than the amount of the last month's rent plus the security deposit).

There are several advantages. For example, in our current landlord's market with rents increasing rapidly there may be confusion if you have collected the last month's rent upon move-in and the rent is later increased.

Also, by allocating the funds collected in advance as the last month's rent, you are potentially limited to using the funds only for that purpose. Using the generic term "security deposit" will allow you to utilize the funds for any legal purpose. This can be important should there be damage to your rental.

Smith: I advise my landlord clients to call the entire sum held security deposit. There are good reasons why.

Let's say that you take a first and last month's rent, and deposit.

If the resident later gives you a proper written 30-day notice, you apply the "last month's rent" to the final month. If the place is left trashed, you'd like to keep all the money held against damages to the apartment, but you can't. The last month's rent part must be used for rent only -- just the security deposit part can be used for damages.

IF YOU'RE A TENANT OR LANDLORD, the authors stand ready to answer your questions in this column, although letters cannot be answered individually. Write them at: Rental Roundtable, Homes Section, San Diego Union-Tribune, P.O. Box 120191, San Diego, CA, 92112-0191. Or you may e-mail them at rgriswold@retodayradio.com

Back to 1998 Rental Roundtable Index

Robert Griswold and the Real Estate Today! radio show strongly support the intent and the letter of all federal and state fair housing laws. As a reminder to all owners and managers of real estate, note that all real estate advertised is subject to the Federal Fair Housing Act, which makes it illegal to advertise "any preference, limitation, discrimination because of race, color, national origin or ancestry, religion, sex, physical disability, or familial status, or intention to make any such preference, limitation or discrimination." Additional state and/or local fair housing laws may also apply. Be sure to inform all persons that all dwellings offered or advertised are on an equal opportunity basis.

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Revised and Updated - Wednesday, April 26, 2006

Robert S. Griswold, CRE, CPM, CCIM, PCAM, GRI, ARM
Griswold Corporate Center
Griswold Real Estate Management, Inc.
5703 Oberlin Drive, Suite 300
San Diego, CA 92121-1743
Phone: (858) 597-6100
Fax: (858) 597-6161
Email: rgriswold.ret@retodayradio.com