Rent it Right
Rent it Right
Q: I'm a foreign student studying here on a student visa. I've lived in a rent-controlled apartment for two years, and just now got a rent increase that's a lot larger than the rent board allows. My landlord claims he can do this because my status as a foreigner means that I can't claim the protection of the rent-control ordinance. Isn't that discriminatory? --Larry S.
A: Your landlord has hit on a novel argument to support taking you out of the protection of rent control. Whether he can succeed will depend on the wording of the rent-control law and, ultimately, the judgment of a court.
Most rent-control ordinances require the tenant to use the rental as his primary dwelling. There's a very good reason for this rule: Rent control has always been seen as a way to keep people in their homes by lessening the punishing effects of a rising rental market on established tenants who live in the rental.
The ordinances were not intended to benefit those who kept a city apartment for occasional use, as happens frequently in New York City.
In a word, those who can afford a "pied-a-terre" (French, for "temporary lodging") are not likely to need the protection of rent control, and allowing them to keep the apartments they occasionally visit is not going to prevent homelessness, maintain neighborhood stability, or serve any of the other goals of rent-control laws.
But your status as a student visa holder is hardly like that of a well-to-do person who happened to once live in a rent-controlled apartment, but who then decamped for the suburbs, wishing now and then to pop back into town to take in a show or museum exhibit. You're here for an extended stay, with no alternative place to live.
Yes, it's true that you will have to return home when your studies are done (or if you drop out of school or violate the terms of your student visa), but you are not likely to zip back and forth from your home country to the U.S. while you're studying, or to spend most of your time in your home country.
In short, in practical terms, it's hard to see how you differ from a legal resident who, like you, lives in a rent-controlled unit while at school, and who intends to move on after graduation.
Q: I'm a landlord with commercial and residential properties. I require all of my residential tenants to carry renters insurance, and make them show me proof that they have it (and keep it). If they let the policy lapse, I'd like to do what I do with my commercial tenants: have the right to pay the premium out of their security deposit, then demand that they replenish the deposit (or face termination). Can I do that? --Peter J.
A: Your practice of requiring your residential tenants to carry renters insurance is a good one. As long as this is legal in your state (in some states, it isn't), it will help protect your bottom line. For example, if a tenant's carelessness results in a kitchen fire, the tenant's policy will cover the cost of repairs. You won't have to look to your own property insurance policy to cover it, nor will you have to look directly to the tenant for reimbursement (if you decide to pay for repairs on your own).
Commercial leases commonly provide that security deposits may be used to cover any amount that the tenant is required to pay under the lease. Because insurance premiums are payments required by the lease, this provision allows landlords to do precisely what you're doing: Step up and pay the insurance premium out of the security deposit. Then, the landlord can demand that the deposit be replenished, and terminate the lease if the tenant refuses.
The same result could be accomplished by a lease clause providing that allowing the policy to lapse is grounds for termination, but this creates a timing problem: The policy will have lapsed before the landlord can do anything about it. Landlords prefer to keep the policy in place while they deal with the tenant over the security deposit.
But in a residential context, this approach may not work. Security deposit statutes in many states specify exactly how the landlord may use the deposit, and for what expenses.
For example, in California, the deposit may be used for back rent, to repair damage beyond normal wear and tear, and to clean the rental to the level of cleanliness that existed when the tenancy began. Because "paying renters insurance premiums when the tenant fails to do so" doesn't appear on this list, you would have a tough time justifying your policy.
Besides dipping into the security deposit to pay insurance premiums, some landlords have used another creative approach: making these payments "rent," by simply declaring them to be "additional rent" in the lease. But this, too, probably won't work in a residential context.
For example, landlords' attempts to take late fees from the deposit are arguably illegal, even if those fees are designated as "additional rent." Calling a fee "rent" purely in order use the deposit to pay it is usually a losing argument, no matter how much the landlord would like it to be otherwise.
Top 5 posts from last week
What's Your Home Worth?
Real estate market recap, May 18-22