Author: Denise Evans

Nationally published author of real estate investing books, textbooks, reference materials and online courses. Former adjunct professor of real estate at the University of Alabama College of Business. Retired litigation attorney (Texas) in real estate and banking law. Member of the Texas Bar College. Owner of Butler Evans Education (Alabama tax sale investing) and Alabama Landlords. Real estate investor, manager, and developer. Currently live and invest in Alabama.
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Sex Offenders

You can deny housing to sex offenders on the Registry, and not violate the Fair Housing laws, as long as you turn down ALL sex offenders on the Registry. If you are using the Registry as an excuse to turn down somebody who is Hispanic, for example, but White offenders are allowed housing, then you will be in trouble. My authority for this statement comes from the United States Department of Justice information page regarding Fair Housing Act at https://www.justice.gov/crt/fair-housing-act-1

You can also deny housing to anyone who has a criminal conviction for manufacture or distribution of illegal drugs, no matter when the conviction occurred. Same thing as the sex offenders–it can’t be an excuse to turn down some people and rent to others with the same history. My authority for this statement comes from 42 U.S.C. §3607(b)(4); See, also Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Activities, April 4, 2016, at pg 8.

Aside from that, you are not allowed to have a blanket prohibition against people with convictions within a certain time frame. HUD says you must take into account the type of crime, the age of the person at the time it was committed, how much time has passed, and rehabilitation evidence in the meantime. Wish I could be less vague, but HUD hasn’t provided any more guidance than that. My advice-continue to turn down people convicted of violent crimes or arson, or multiple property crimes such as theft, and don’t worry about drug use offenses more than a year old.

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Renters Insurance

Landlords should insist on renters insurance for their own protection. As a marketing tool, you can often include the insurance as a free bonus to tenants.

Renters insurance can be purchased for around $210 a year for $10,000 replacement cost coverage, $100,000 liability, and a $500 deductible. That quote is for a policy that does not depend on checking credit scores or insurance history. Tenants who suffer a loss are less likely to sue the landlord (for the tornado, the theft, the fire, whatever) if they have insurance they can use. The money has to come from somewhere, right? The liability portion provides a fund in case the landlord has claims against the tenant for being the one who burned the place to the ground, as one example. Another situation would be if your tenant were sued for harming somebody, he would have money available to pay your rent while his renters insurance pays for legal fees and paying off claims.

Tenants often have no idea the insurance is so cheap. They are usually reluctant to spend the time calling for quotes or filling out online forms. Many have been unable to get economically priced insurance for health or auto. Or, they bought insurance in the past and then lost it when they could not keep up the monthly payments. To them, it seems like a waste of time to try to get renters insurance.

In my experience, a landlord who spends $17.50 a month on renters insurance can almost always price their rent $20 a month above the market, if they offer the insurance at no charge! Plus, just offering the insurance gives them a competitive advantage in the market place.

Call your own insurance agent to check out prices, policy limits, deductibles, and underwriting criteria that might cause the premium to be higher. Then have your lawyer help write up the disclaimer language that goes with your marketing, so you don’t get locked into paying higher premiums than you intended. Let us know how it works for you!

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Repair Requests

You don’t need specialized software to have easy online management of repair requests. Spend 20 minutes setting up our system, and you will save LOTS of time later, and always have a paper trail if somebody lies about something. Interested?

It all starts with creating an online form in Google Forms or one of the other services that have free forms, if you don’t have a google account. You are limited in the number of forms and fields, but almost anybody’s free subscription should work for you. JotForm.com is one. There are many others.

The steps for creating forms are very easy and intuitive. These are the fields you need:

  • Tenant name (short text block, click setting to make entry required)
  • Address and unit number, if applicable (short text block, click setting to make entry required)
  • Cell phone number (short text block, make required)
  • How long has this problem been going on? (short text block, make required)
  • Describe the problem (long text block, make required)

The form generator will create the form for you, and assign a url (website address) to your form. Now you have to make it easy for your tenants to get to the place to use the form for a repair request.

The best way to make it easy for your tenants is to create a QR code for the url of your form. For some of you reading this, that sounded like Greek, didn’t it? QR codes are like the one at the left. If you have the free QR code app on your phone, you can open the app, click on the code as if you are taking a picture of it, and your phone will open a specific webpage for you. It can do lots of other things if you want, but for this article we want that code to take your tenant to the place where you have your online form for repair requests. BTW, the QR code at the left will take you to the Gulf Shores, Alabama, beach cam.

Once your tenant clicks on the code, the repair request form will open on their phone. They can complete the fields and then click on “send.” The system will them send you an email with all the information the tenant just entered on the form, plus the date and time. You can forward the email to a repair person, and add your own comments if you want. You can print it out and put it in the tenant’s file or on your stack of “To Do” items. You can do ANYTHING you could do after talking to a tenant or listening to a voice mail message and writing down notes of your conversation.

PLUS you have a paper trail so if a tenant claims it made a repair request (but did not) there is no form to back up his claim. If he claims he asked for something different, the paper trail does not back him up. If she claims she never gave you permission to enter her apartment and did not ask for any repairs, the paper trail saves your fanny. Because, if the tenant asks for repairs, you automatically have permission to enter, under the Alabama Residential Landlord Tenant Act.

How do you create the QR Code? Go to any one of the free QR code generator websites. One that I use is https://www.the-qrcode-generator.com/ Select a static form. Those are usually free. Dynamic codes let you later change what happens when someone clicks on it. You don’t need that feature. When asked, enter the url for the form you created. The website will generate a QR code for you. Download it. Print it out. Put a copy inside one of the kitchen cabinets, with a label saying what it is.

When you sign up a new tenant, make sure they download the QR code app. Write something in your lease saying that repair requests MUST be via the online form. Be sure to mention this during the initial move-in walk-thru and inspection.

Sit back, and watch your life get a lot easier!

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City Inspections

Several months ago, somebody wrote to us about a new local law that required city inspections each time a residential rental property changed to a new tenant. Gadsden passed such a law in 2007. THIS IS COMING to other municipalities around the state. You might delay things, but you are not going to stop it. The best strategy is to manage it, so the result will protect tenants while at the same time not placing an undue burden on the good landlords who try to keep their properties in habitable condition.

The Gadsden ordinance requires current building code compliance. In other words, nothing is grandfathered in. When a rental becomes vacant, it must be inspected for code compliance. The cost is $50 for the initial inspection and one follow-up. Additional follow-ups cost more. Landlords may opt to use a licensed home inspector instead of a city inspector, which might be faster, albeit more expensive. If the dwelling passes, it will receive a certificate of occupancy. It is illegal to rent a “rental housing unit”that does not have a certificate of occupancy.

Scary language in paragraph (e) of the Gadsden law refers to “annual inspections” and says that if a property fails an annual inspection, the tenant will have to be relocated until the problems are fixed. There is no language requiring annual inspections, so I am not sure what is going on there.

We are working on drafting a model ordinance that will meet city concerns for tenant health and safety while also addressing landlord concerns about slow inspections and unreasonable demands by inspectors. When word reaches us that a city is planning an ordinance like the one in Gadsden, we can present them with a model law to copy. That way we increase the odds that we won’t get stuck with some poorly worded and onerous ordinances. Anyone who has any comments or suggestions should indicate them below, or send a private email on the “Contact” page.

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Smells, Noise, Allergies

Landlords of multi-family properties have an obligation to ensure that all tenants have the quiet enjoyment of their premises.  This includes the right to be free from strong odors, allergens and noise.  We all understand the part about noise, and have for years enforced rules about tenants and excessive noise from parties, music and arguments. 

Why are we afraid to enforce rules about cooking odors and pet noise/odors/allergens?  Because someone always hits us back with some explanation that contains the words “Fair Housing.”

There is no need to be afraid of this, though.  Tenants are not allowed to interfere with the quiet enjoyment of other tenants. This includes the intrusion of offensive or dangerous sounds or substances into the space of the innocent tenant, or into the common areas. In other words, tenants are not allowed to “over-share.” 

Not only CAN the landlord do something about over-sharing, he SHOULD do something about it. That is because of two legal principles called “quiet enjoyment” and “constructive eviction.”  If the innocent tenant claims his quiet enjoyment rights have been violated, and the landlord did not remedy the situation, the innocent tenant can claim a “constructive eviction,” cancel its lease, and sue the landlord for damages.

Do not let the offending tenant frame the issue. It is not one of national origin discrimination. The issue is not about disabilities and Fair Housing. The issue is one of the quiet enjoyment rights of other tenants.

Which one trumps the other? Quiet enjoyment trumps Fair Housing.

The Fair Housing rule that requires you to accept an emotional support animal, or a service animal, is called a Reasonable Accommodation Request. It is a reasonable request to modify the rules in order to accommodate a tenant with a disability.  We all seem to forget the “reasonable” part of that phrase.  While it might be reasonable to allow the animal, that does not include the unlimited right to do whatever the tenant wants in connection with the animal. The tenant cannot be cruel to the animal, it cannot allow the animal to damage the rental unit, it is liable if the animal injures someone else, and its animal is not allowed to intrude into other people’s living spaces either with its physical presence or its noise, odors or allergens.

The Fair Housing rule that prevents discrimination on the basis of national origin means you cannot refuse to rent to Hispanics or persons from the Middle East, as examples. You do not have to allow culturally important activities that create excessive noise. You are allowed to put occupancy limits related to the number of bedrooms, even though some cultures might routinely allow 5 or 6 people to occupy each bedroom.  And, you are allowed to prohibit over-sharing of cooking odors that other tenants find objectionable.

The landlord’s response in these situations should be, “I am not restricting your right to cook the foods of your heritage.[Or, I am not restricting your right to have an emotional support or service animal.]  I am restricting your over-sharing. You rented Unit 123. You are allowed to use Unit 123. You are not allowed to use other units. You are not allowed to invade other units with odors, noise, or allergens that adversely affect tenants in other units. You are not allowed to invade the common areas with odors, noise or allergens, to such a degree that the common areas cannot be peaceably enjoyed by all tenants.  You must take steps to control these things, or you will be subject to eviction and suit for damages.”

Of course, this all depends on having the right lease language to allow landlord enforcement. If you are not sure, you might want to have your attorney review your lease documents. To learn more, check out some of our classes listed below.

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Extra Revenue

Most apartment complexes have open parking. The first one to find a spot, gets the spot. Until next time. When someone else might get the good space.

Apartment complexes around the country are setting aside 10% to 15% of their spaces for reserved parking. Tenants can pay for the expense of a sign for their reserved spot, plus parking space rental of $20 to $200 per month, depending on market conditions and apartment rental rates. The tenant of a luxury apartment renting for $1,500 a month would think nothing about spending another $100 for a reserved place. If you charged only $20, you’d be leaving money on the table.

Yes, there are some headaches with people illegally parking in someone else’s reserved spot. A large fine to the guilty party if a tenant, or towing the offending car if anyone else, will send the right message and avoid future problems.

Using a conservative cap rate of 6%, adding $1,000 a month in reserved parking fees results in $12,000 a year of additional revenue and an increased value of $200,000 for the property. There are no additional expenses in creating that revenue and value, because the tenant pays for the sign!

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Approve More Tenants

Landlords usually have a green light/red light approach to tenant screening and eligibility. Meet the requirements and you are approved. Fail, and you are denied. Instead of that, think about a 3-tier approval system.

This would be a green light/yellow light/red light system. If 640 is the required credit score to approve a tenant (green light) then perhaps the yellow light zone is 600 to 639. Yellow zone prospects might be eligible if they provide a guarantor, pay a higher rental rate, and/or prepay some rent in addition to having a security deposit requirement. Anyone below 600 is in the red zone and denied.

With this approach, you will obtain more tenants but have safeguards in place for increased credit risks.

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Section 8 Ineligible

Alabama low income housing boards have been changing their policies, and will no longer accept properties for Section 8 housing if there are outstanding redemption rights. That means lender-foreclosed properties must wait out the six to twelve months of redemption, depending on whether it was homestead exempt or not.

Tax sale properties will need a quiet title order to be sure that all redemption rights have expired.

A faster solution is to get a quitclaim deed from the former owner (or heirs) or a release of their redemption rights.

The reasoning is that the Housing Authority does not want to put a family into a Section 8 home, and then have them disrupted later when they have to move because of redemption. Yes, I know redemptions rarely occur with lender foreclosures, but the risk is still there.  In addition to the cost and disruption of the actual move, replacement housing might not be available in the same area, or at all.

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Unpaid Water Bills

You are not liable for your tenant’s bills unless you agree in writing!

Local water authorities cannot make landlord pay former tenant’s past due water bill before turning on water for new tenant. They claim they can, because of their local “rules,” but that doesn’t make it legal. Anybody can make up rules for their handbooks. If you agree, then that’s a contract. Otherwise, it’s just wishful thinking on their part.

Ala Code Section 35-9-15 says, “The provider of goods or services may not require a landlord or real property owner to pay the delinquent bill of a tenant for goods or services provided to the tenant of the landlord if the account for the goods or services is in the name of the tenant. In addition, the provider of goods or services shall not have a lien on the real property for any goods or services provided in the name of the tenant.” Also, Section 35-9-14 says, “Notwithstanding any other provision of law, any bill for sewer service received in the name of a tenant or tenants, shall be the sole responsibility of the tenant or tenants and shall not constitute a lien on the property where the sewer service was received.”

If local water authorities refuse to connect water for a new tenant just because the old one has an outstanding bill, show them a copy of this article. If that does not work, contact the attorney for the water authority.  Usually, THAT person knows how to read a statute and understand what it means.

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Default After Renewal

College StudentsThis is a problem in college areas because leases are often signed 9-10 months in advance. Is the renewal lease enforceable if the tenant defaults on his or her current lease?

In other words, what happens if a tenant is a good tenant from August through November of 2018 and then signs a renewal lease for August 2019 through July 2020. Then, in May or June of 2019, the tenant defaults on his first lease.  Can the landlord cancel the renewal lease, assuming it wants to do that?

We don’t know. It seems like the landlord SHOULD be able to cancel the renewal lease. On the other hand, I cannot find anything that authorizes that.  My advice: Talk to your lawyers. If recommended, maybe write a new clause into your forms so if a current lease is terminated for any reason, then the landlord will also have the right to terminate a renewal lease.

By the way, don’t forget about purchase options. I recommend that landlords who give purchase options in their leases have a clause saying it is null and void if the tenant defaults.  Some landlords say any default, even if cured. Some say only uncured defaults. Some don’t even think about this issue. At least think about it!

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Default Notices

Effective June 1, 2018, the law changed regarding default notices. Previously, you had to give tenants notice of default and seven calendar days to cure.  After, you have to give them seven business days to cure.

Judges around the state have been throwing out eviction lawsuits unless the default notice specifically says seven BUSINESS days. They are saying it is not enough to say “seven days” in the notice and then wait seven business days before filing the eviction. The statute does not say how the notice must be worded, but the judges are in control when it comes to evictions.  There is no point in arguing with the judge. Just do things their way, and avoid problems.

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Fair Housing Exemptions

Many landlords incorrectly believe they are exempt from the Fair Housing laws.  It comes up most often when a tenant wants to have an emotional support animal and the landlord says, “No pets allowed, and I’m exempt from the Fair Housing laws.”

I’ve been told that landlords of single family residences are exempt. That is not true.  Believing this urban legend can get you in trouble.

Exemption #1 is for landlords of dwellings with four or fewer units, and the landlord lives in one of them. It has to be their only rental property. It must be owned in the landlord’s personal name, and not a corporation or LLC.

Exemption #2 is for landlords who own three or fewer single family residences as their only rental properties, and all titled in their own personal name.

You can lose your exemption if you use a licensed real estate person to assist with the properties OR if you use someone “in the business of real estate.”  Someone is in the business of real estate if they have more than two transactions in a year.