Avoid giving rental rights to guests

Rent it Right

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Nov. 11, 2010

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Rent it Right

Janet Portman
Inman News

Q: I'd like to offer temporary housing to people in the neighboring town whose houses have been burned by a natural gas explosion. I have a vacant rental unit that could be used, but I would not collect rent, and I'd expect that the residents would be out within a few months at most. Is there any advice you can give me on how to set this up? --Betsy B.

A: It's very kind of you to offer temporary housing to your neighbors. Similar gestures followed the massive homelessness caused by Hurricane Katrina. The generous souls who opened their homes generally had good experiences, but there were anecdotal accounts of some problems, including the refusal of some guests to leave. You're wise to think ahead about how to forestall any problems.

You'll want to make it very clear to your guests that they are just that -- guests, and not tenants. That's because you don't want these visitors to have the legal rights of tenants, including the right to an orderly eviction process in court, if you want them to leave and they want to stay.

Consider writing up the details of your offer, describing the visitors as guests who will not pay rent, in money or in services, and who agree to leave upon being asked. Ask your guests to sign this agreement. Although it may seem inhospitable, it's the best way to establish from the start that they are your guests, not your tenants.

During their stay, be sure to honor the agreement by refusing to accept money or services. Again, this may seem needlessly "legalistic," and I can imagine readers cringing at the thought of refusing a visitor's offer to help out -- their only way to thank you and repay your generosity.

That's a fair enough response, and you are certainly free to skip this part of the advice and accept your guests' offers. But keep in mind that legally you'll be compromising your ability to enforce the "guest-not-a-tenant" agreement if relations go south. Only you can assess how significant that risk is and whether you are willing to take it.

Q: I'm a tenant and a manager at my apartment complex. As the manager, I handle all tenant complaints and requests for maintenance, show apartments, perform many minor repairs, and do a lot of general janitorial work. I get reduced rent for all of this. But when I hurt myself while fixing a tenant's sink, my landlord wouldn't cover my medical bills. Is there anything I can do? --Roger E.

A: If we were to ask your landlord why he's refusing to cover your medical expenses, he'd no doubt say, "Roger is not my employee; he's an independent contractor. So it's up to him to cover his own medical bills when he gets hurt through no fault of mine." But while it is generally true that an independent contractor cannot require his client to reimburse him for "on-the-job" injuries, that's putting the cart before the horse.

The first, critical question is: Are you legally an independent contractor or has your landlord misclassified you? If, in the eyes of the law, your work situation indicates that you should have been classified (and treated) as an employee, then you may indeed be able to look to your landlord for coverage of your medical bills.

A lawyer looking at your case would begin with a bunch of questions, all designed to figure out how much independence and discretion you exercise in your work.

Typically, an independent contractor works for more than one person or firm, supplies his own tools, decides how the job is to be done (exercises a lot of discretion), gets paid by the job (instead of by the hour), sets his own working hours, and pays his own expenses.

An employee, on the other hand, has much less independence. He is paid by the hour, gets overtime, and -- most importantly -- is often told exactly how to do the job.

Without a detailed conversation about exactly what you do for your landlord and how you do it, it's impossible to decide whether you were properly treated as an independent contractor.

But let's suppose for a moment that you and your lawyer decide to challenge the landlord's refusal to cover your bills. You'd raise the issue with your state's employment department or agency by filing a complaint alleging that the landlord misclassified you as an independent contractor and failed to provide workers' compensation coverage, which is required in your state.

If you were to win, you'd be reimbursed for your expenses, and the landlord would probably face a big fine.

Private lawsuits alleging improper classification of workers have hit the delivery and trucking industries particularly hard, resulting in big settlements from UPS and FedEx.

The IRS and the Wage and Hour Division of the federal Labor Department have been especially busy auditing companies that they suspect of misclassifications. Of course, the feds probably have bigger fish to fry than individual landlords, but that doesn't mean that you couldn't bring the matter to your state's labor department on your own.

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