Know when 'house rules' violate lease

Rent it Right

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Nov. 18, 2011

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Rent it Right

Janet Portman
Inman News™

Q: As a property manager, I am under contract with an owner to advertise and show his single-family rental. I recently chose new tenants and signed the lease. Since then, the owner has sent the tenants a nonsmoking policy, specifying that if any guests smoke on the property, it will constitute a violation of the lease and can result in termination.

He is also demanding proof that their dog is current on vaccinations; a statement from their vet that the dog is current on monthly flea and tick medicine; and a copy of their renters insurance policy.

He's also issued detailed cleaning instructions, including a demand that the air conditioner and heater filters be cleaned or replaced every month. Can he do this? --Chris B.

A: Your owner appears to be a little confused as to the meaning of a lease: It's a contract that binds both sides to its terms, as written. If one party to the lease wants to change or add to those terms, it must get the OK from the other party. Unless everyone agrees to vary the terms of the deal -- which includes adding important conditions as to use and defaults (a violation that triggers a termination notice) -- those changes are ineffective.

However, it's possible to put some "rules and regulations" in a document other than the signed lease. Commonly known as "house rules" in multiunit complexes, these rules cover day-to-day aspects of the rental, such as use of the pool, laundry room and parking areas; operating hours for the manager's office; or how to reserve the clubhouse. These are details that one would not expect in a lease -- they're simply too minor. Because of that, landlords generally don't need to give month-to-month tenants the legally required notice of any changes to these rules (the notice they must give to raise the rent, for example). And changes will apply immediately to lease-holding tenants.

In other words, the landlord can change these rules without the tenants' agreement and without renegotiating the rental agreement or lease.

Obviously, the key question is: How do you tell the difference between a provision that belongs in a lease (and cannot be added unilaterally, midlease), and a house rule, which can be announced at any reasonable time?

One rule of thumb is to ask whether the rule is one that a tenant would seriously think about before committing to the rental. If it concerns an issue that might be a deal-breaker or at least one that the tenant would seriously weigh before signing a lease or rental agreement, it likely belongs in the lease.

Let's look at the additional provisions your owner is attempting to place on this tenancy. A nonsmoking policy, particularly one that makes a violation of the policy a lease default, is a big deal. This policy belongs in a lease. Renters insurance is similarly a significant provision: Although it's a wise investment for all tenants, it's also an extra expense, which they should be aware of before signing a lease.

With respect to the pet rules, there's a good argument that they, too, belong in a lease. Some owners won't want the hassle of providing vaccination proof (and may argue about the need for vaccinations other than those for rabies), and some might not want to give their animals monthly treatments for fleas and ticks.

Detailed instructions for cleaning may also fall within the "belongs in the lease" camp. Requiring constant filter replacements is, again, costly; and telling someone how to clean the house is downright invasive. Many applicants, seeing the extent to which the owner intends to regulate their lives, might decline the rental on that basis.

It really comes down to this: If these new rules are very important to the owner, they are probably also significant to the tenants. If so, the tenants should have been made aware of them before they signed up. In the future, your owner should either include them in the lease or place them in a "house rules" document that he instructs you to give to applicants during the application process. That way, prospective tenants will get a sense of what this owner is likely to demand, and can make decisions accordingly.

Q: I just read about the Protecting Tenants in Foreclosure Act, which allows purchasers at a foreclosure sale to oust lease-holding tenants with 90 days' notice. But buyers at a normal sale must honor the lease. It doesn't seem right that there are two classes of tenants: those who have landlords who pay their mortgages and sell the properties, where the tenants' leases have to be honored by the new owners; and those who have deadbeat landlords whose leases the new owners don't have to honor. --Jean T.

A: You raise a legitimate point. Just to clarify, not every sale following foreclosure will enable the new buyers to terminate lease-holding tenants. Only when the new owners intend to personally occupy the residence may they terminate (with 90 days' notice); the new owner can't terminate a lease in order to charge a higher rent, for example. The new owner may oust a tenant on 90 days' notice only if the person who wants to live in the property is the purchaser at the foreclosure sale, not if the bank becomes the owner, or when someone buys later from the bank. For these protections to apply, lease-holding tenants must be "bona fide" tenants, which means that:

  • the tenant isn't the spouse, child or parent of the previous owner;
  • the leasing transaction was conducted in an "arm's length" manner; and
  • the rent isn't "substantially below" fair market value.

Now to your observation: It's true, unless the lease provides otherwise, that a tenant with a lease will survive the sale of the property, even to someone who intends to live there. Before going further, it's important to explain that "unless" part: Many owners, knowing that they may want to sell the property during the term of the lease, include a clause in the lease providing for termination upon sale, with typically at least a month or more notice. Prospective tenants, seeing this clause, will be forewarned and may choose not to rent for fear of losing the lease midterm.

But owners who lose the property through foreclosure usually haven't warned their tenants, in a lease clause, that the lease could terminate in 90 days. I know of no law that requires landlords to disclose this rule. I suppose the answer to your complaint is that it might be a good idea to require landlords to make this disclosure in the lease, just as they are required, by various states, to disclose information about how to contact the landlord, how to make official complaints, whether the unit or property has a pest control service, whether the unit has flooded recently, and so on.

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