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| Table of Contents Agency - Who's Representing You? |
MARYLAND SECURITY DEPOSITS Did you know that owners of rental property located within the state of Maryland are required to follow the same regulations regarding security deposits as brokers? Remember these provisions of the law...
Violations of security deposit law by landlords may result in loss of forfeiture rights and/or payment to tenants of treble damages (three times the amount wrongfully withheld).
When a tenant fails to pay rent or otherwise violates lease terms, eviction is the most immediate remedy available to landlords. The District Court of Maryland is the authority to whom landlords petition for eviction. Landlords may also have other rights including security deposit forfeiture or a civil judgment for damages (damages being defined as money owed to the landlord for any reason including unpaid rent, late charges or property damage). But, when a landlord files suit for possession, the summons may be mailed to the tenant or tacked on the door. If damages are sought, the summons must be served on the person. So, including a request for a money judgment will likely delay any eviction. When a landlord sues for possession, a court date is granted. Unless the tenant can demonstrate some pretty extenuating circumstances, the landlord is awarded judgment. This happens within about two weeks following the filing of the suit. Automatically, there is a waiting period (stay) of five days to enable the tenant to pay, thereby canceling the judgment for possession. Once the stay has expired, if payment has not been received, the landlord may request a writ of restitution. That is the order for the Sheriff to authorize and supervise an eviction. By that time, some four to six weeks have passed. The deputy will notify the landlord of the date and time of the eviction and the number of workers needed to accomplish the eviction (in DC the US Marshall serve eviction writs and in Montgomery County, the landlord must call the Sheriff to schedule). It is the responsibility of the landlord to procure and pay for the crew. District Court cases filed in one month, but not tried until after the first of the next month can now result in judgment for the subsequent month without re-filing! The landlord must request, on the original petition, any additional rents which come due prior to the court date. Also, District Court cases may now include late charges and other charges due "as additional rent". Furthermore, any charges carried forward into a subsequent month (ie: damages, late charges, legal fees) carry forward as "rent" and are subject to District Court judgment. Remember, at any time up to the date of the eviction, if the tenant pays, only the amount due under the judgment, the process comes to a screeching halt. It is possible to sue for January rent, have a trial in February and show up with a 15 member eviction crew on the 2th only to have the tenant hand you the January rent (and February if you remember to ask for judgment for February) and send you away. You are out the cost of the workers and all the legal work. In Maryland, landlords may charge the tenant for the legal fees and court costs provided the lease so states. In DC, only the court costs may be passed on. So, this can go on and on and on.. but there are limits. First, when the original lease term expires, landlords can simply discontinue the tenancy by giving the appropriate notice. But, in the interim, a landlord can put an end to it by requesting an "absolute judgment" with no right of redemption provided at least three prior judgments have been secured during the past 12 months. Then, whether payment is made or not, the eviction can proceed.
MARYLAND'S LEAD PAINT RISK REDUCTION PROGRAM For up to the minute changes, please visit our Community Links page and click on Government and Maryland Dept of the Environment. Effective February 24, 1996, all rental units constructed prior to 1979 (construction date is considered to be the date the construction permit was issued) must be registered with the Maryland Department of the Environment (MDE). If you have not registered, you should contact MDE at 1-800-776-2706. Units constructed prior to 1950 are considered "affected" units and are REQUIRED to participate in the program. Units constructed after 1949 but before 1979 may opt into the program (in which case they are considered "affected" units) or out of the program. Any "affected" unit rented after February 24, 1996 without testing and appropriate risk reduction measures is illegally rented. Owners of affected units have some responsibilities. Between tenants, all units must be tested unless they were previously tested with an XRF test and found to be lead free. Testing must be by one of two forms: 1. Dust Wipe
2. X-Ray Fluorescent (XRF)
Further, by now, all affected units should have undergone testing and should have passed either a dust wipe or XRF test, even if the property has remained continuously occupied since the law went into effect February 24, 1996. We often hear owners say that they tested the property when they bought it. That's nice, but the usual home test does not meet the requirements under this rental property law. So, how do you pick which test to have done? Well, if you think the property might be lead-free, the XRF can prove your suspicions. However, if the test shows ANY lead, you must then either pass a dust wipe or abate the lead. In short, abatement means removal of lead paint or lead painted components (like windows and doors) or encapsulation (like covering with aluminum siding). As a former lead abatement contractor, I could go on for hours about abatement. Suffice it to say, there can be no exposed lead paint and no lead dust remaining and there are very specific procedures to follow to accomplish abatement. The XRF should only be used if you a) suspect the property is lead-free or b) if you plan to invest in making the property lead-free. The less expensive route is a dust-wipe. In this test, the tester will sample areas such as window sills and window wells, floors and other horizontal surfaces for lead dust. Maybe it's cheating, but you are free to give your property a thorough cleaning before testing. Such a cleaning, while not a lead abatement treatment, might include the use of fresh water and detergent on all areas which might be tested. You would change the water frequently. Then, you're likely to test okay. Remember, the dust wipe test proves only that there were no lead dust levels found which exceeded the permitted limits at the time of the test. If your windows have lead paint, you might pass today and fail a week later. Fortunately, you are not required to test a week later; only between tenants. Okay, let's analyze the results. You failed the dust wipe test.. Now you are required to have a HEPA cleaning performed by a licensed lead abatement contractor. This will entail the kind of washing described above, but of all walls, floors windows and doors. They will also vacuum the walls and floors with a HEPA vacuum (which will likely scratch the walls, so paint AFTER the cleaning). Then, you must have another dust-wipe test performed. You've now spent $1,000 or more bringing the property into compliance. Worse yet, you failed the XRF. You paid more for this test than for the dust wipe and you don't know whether you have acceptable levels of lead dust. You may only know that you have lead paint on one or more painted surfaces. You have two options. 1) scrap that test and do a dust-wipe test or 2) hire an abatement contractor to remove the paint or the contaminated components, HEPA clean the work areas AND pass a dust wipe! Well, if you tell me I can spend lots of money on abatement then pay for a dust wipe OR I can give the house a good cleaning then pay for a dust-wipe... well, I just see no reason to perform abatement. At least, I see no reason unless I am trying to either protect my tenant beyond the requirements of the law or I want to increase my property value by having it declared lead free. Those are viable reasons, but are not required under this law. The MDE will suggest that you treat properties with lead-based paint by performing a 10-Step Program. This is NOT required, but here's what it involves: 1. Visual review of all exterior and interior painted surfaces; 2. Removal and repainting or chipping, peeling, or flaking paint on exterior and interior painted surfaces; 3. Repair any structural defect that is causing the paint to chip, peel, or flake that the owner of the affected property has knowledge of or, with the exercise of reasonable care, should have knowledge of; 4. Stripping and repainting, replacing, or encapsulating all interior window sills with vinyl, metal, or any other material and under conditions approved by the Department of the Environment; 5. Ensure that caps of vinyl, aluminum, other material in a manner and under conditions approved by the Department of the Environment, are installed in all window wells in order to make the window wells smooth and cleanable; 6. Except for a treated or replacement window that is free of lead-based paint on its friction surfaces, fixing the top sash of all windows in place in order to eliminate the friction caused by movement of the top sash; 7. Rehanging all doors necessary in order to prevent the rubbing together of a lead-painted surface with another surface; 8. Making all bare floors smooth and cleanable; 9. Ensure that all kitchen and bathroom floors are overlaid with a smooth, water resistant covering; and 10. HEPA-vacuuming and washing of the interior of the affected property with a high phosphate detergent or its equivalent, as determined by the Maryland Department of the Environment. Of course, there is one more exception. If the property is undergoing a Risk Reduction Program while occupied, step #8 may be omitted. Hence, occupied properties undergo a "Modified Risk Reduction" whereas vacant properties undergo "Full Risk Reduction". Now, you've completed testing. You've completed a Risk Reduction Program. The property is rented and stays rented for several years. Then, it goes vacant. If you have not had an XRF proving the property to be lead-free, you must again pass a dust wipe or have the property HEPA-cleaned and inspected to ensure all 10-Step treatments remain in tact. Generally, the dust-wipe will be most cost effective. Oh, what to choose? We believe most properties which might be lead free should have the XRF Test once. These are generally properties built between 1950 and 1979. That test, again, is the only one able to determine a property to be lead-free. But, equally important, it will tell which components (window sills, doors, walls, etc) actually have lead-based paint coatings. Then, an owner can make an educated decision whether to clean-up and complete the 10-Step or to abate (remove) all lead and go for a lead-free certificate. It is never necessary to repeat the XRF Test. Between subsequent tenants, if all treatments have remained in tact and you are reasonably sure lead dust has not been redistributed, go for the Dust Wipe. If paint is peeling or there is the expectation that lead dust is everywhere again, repeat the steps necessary to restore the 10-Step treatment, HEPA Clean and have an inspector perform a Visual Inspection. Is that all? Almost. Each lease entered into after February 24, 1996 must include a disclosure form (to comply with EPA regulations), an EPA brochure on lead-based paint in homes plus a brochure provided by the Maryland Department of the Environment. You will receive these when you register the property and you may use photo copies as needed for future use. Finally, if the same tenant remains in the property for two years, you must provide additional copies of the EPA and MDE brochures again, every two years. Now, you are in compliance. What have you accomplished? It would be nice to think you have saved the children. And, in fact, you may have reduced the risk of lead poisoning. But, you have also protected yourself. If you are not in compliance and your tenant's children become injured due to lead poisoning, you could be held liable for literally millions of dollars in damages. If you are in compliance, your maximum liability is $17,500. You are NOT insured for liability when not in compliance. You may be insured for the $17,500 if you are. If you are a Landlord who does his or her own maintenance, you may wonder whether you can perform these treatments yourself. The answer is maybe. If you are actually about to become a Landlord and currently live in the to - be - rental - unit, you may perform the treatments, but an accredited Supervisor must certify, in writing, that the treatments were performed correctly AND there must be a visual inspection performed by an accredited inspector. Landlords can obtain a list of approved testing and abatement companies from the MDE or by calling MMI. For more information about procedures, please e-mail Chris Majerle.
PROPERTY INSPECTIONS Many local jurisdictions conduct inspections of rental units for the purpose of identifying housing code violations. These violations may include faulty smoke detectors, health hazards such as roach or rodent infestations or other conditions that cause property deterioration including roof leaks or plumbing problems. City or county inspectors are limited in what they can cite to the various codes: property standards, health. Landlords are not so limited. While maintaining property in conformance to housing code is generally in the best interests of both landlord and tenant, landlords are entitled to know whether a tenant is in compliance with the lease and is taking good care of the property. So, landlord inspections can and should be more thorough. Most jurisdictions permit the landlord to make inspections of their property with notice, 24 or 48 hours, to the tenant. It is usually desirable to have the tenant's cooperation in this inspection. We find tenants to be understanding and cooperative if they understand that the inspection is not the result of their being singled out for some suspected wrong doing; rather that it is a normal part of our management operation. We explain that we will be inspecting not only for lease violations or general cleanliness, but for items of routine or preventive maintenance. As long as a tenant is advised that this inspection will involve a look at bathtub caulking and a check for leaks inside bathroom vanities, there need not be any concern about opening shower curtains or cabinet doors. Conducting an inspection should take about 15 minutes. The easiest rooms to inspect are the rooms without plumbing like Living & dining rooms, family rooms and bedrooms. Here, we look at the overall condition, but pay special attention to windows. Windows with broken glass, torn screens or peeling paint need attention. Other concerns that may be evident in any room would be roof leaks or rotted/decayed flooring. In the kitchen, check for leaks below the sink, check to see if the faucets are loose. Appliances are generally not of a concern unless damaged, but a look at how items are stored near a stove can help prevent fires. Bathrooms are the quickest areas to decay and require hundreds or thousands of dollars in repairs. Bathtubs and showers should be inspected for grout and caulk over the entire wall surface and in all corners as well as around adjacent floors and around fixtures. Again, with all faucets, check to see if they are securely fastened to the wall or fixture. Toilets are secured to the floor with a wax seal preventing leaking to the adjacent flooring. Placing a foot on the side of the bowl, apply light pressure to see if the toilet will rock. If so, the bolts are loose and damage may be occurring beneath the toilet but may not be visible. In basements or unfinished areas, much more is visible. Look up at all pipes paying particular attention to any wood nearby. The wood will appear wet or may even have a mold growth if there is any leakage. All wiring should be securely fastened and all junctions in closed junction boxes. The main service panel should be covered and accessible. The main water valve should be accessible and well labeled. Be sure all occupants know where both the main electric and water cut-offs are located. Using a flashlight, check all open areas, especially around the perimeter of the house for signs of wood damage or termite tunnels. An occasional professional termite inspection is worthwhile, but often an active infestation is quite visible. Furnaces and gas water heaters should be clear for an area of at least three feet in front of the burner. Be sure the flu pipes are connected. If the units are running, a match held at the opening of the flu pipe will demonstrate whether there is ventilation. Check to see if the filter is clean and ask the occupant when the blower motor, if applicable, has been lubricated in the past six months. The final interior concern would be smoke detectors. Check each by pressing the test button or by spraying a can of smoke. Any dead batteries should be replaced by the tenant within 24 hours. Any malfunctioning smoke detectors should be replaced by the landlord just as quickly. On the outside, start with paint. Unpainted surfaces will decay rapidly. Check windows, doors and frames, soffits and fascias and any wood siding. Look at the roof. Curled or broken shingles indicate a need for a professional inspection. Clogged gutters should be attended to by the tenant. Look at the top of the chimney for any indication that the chimney is in need of masonry work. Concrete walks and steps should be free of trip hazards and any stairs with more than 3 steps require a railing. All railings should be secure. Low spots near the foundation may result in water ponding and should be raised. Water ponding near the foundation can cause basement leaks, damage to the foundation and can attract termites. A little fill dirt or redirecting downspouts can alleviate ponding. Okay, so it takes 20 minutes. It's time well spent if you can identify a problem that could cost thousand to repair if not attended to. Inspections should be conducted about every six months. When you manage rental property for yourself or others, rent collection is only one part of the job. Preservation of the value is equally important and only inspections followed by appropriate maintenance can help ensure that the condition of the property will not cause a decline in value. One final note; a written record of all inspections should be maintained for several years. In addition to helping track the effectiveness of maintenance and any trends in the overall condition, this report can be useful in court to provide evidence that there is an interest taken by the landlord and that defects noted are repaired. Written inspection reports and written repair records will show a court that the property owner takes an active interest and cares about the property. Our inspection form contains a short questionnaire. During the inspection, we ask tenants if there are any pluming or electrical problems, roof leaks or other maintenance concerns. We simply make not that we have asked and we write the response. We do not ask for signatures nor do we leave copies with the tenant.
AGENCY - Who's Representing You? There was a time, not too long ago, when the seller or landlord in a real estate transaction paid the broker and that settled the issue. All the agents represented the seller or landlord and nobody represented the buyer or tenant. Recent changes, however, have made it necessary to discuss agency or representation when using the services of a real estate company. Let's talk about what representation means for a moment. As a seller or landlord, having an agent represent you means your agent has a responsibility to you. The agent is to look out for your best interests. This means to endeavor to secure the highest price possible; to seek qualified purchasers or tenants who will be able to complete the transaction; to keep confidential any non-material information you disclose which might adversely affect your ability to achieve these goals. Some of these facts might include that you are selling due to a divorce or major health problem or that you have to sell or rent within a specific time period to start a new job elsewhere. This knowledge in the hands of your purchaser or tenant can give them an upper hand in the negotiating process. For buyers or renters, having an agent represent you means essentially the same benefits afforded sellers or landlords above would be available to you. Your agent should review comparable transactions to ensure that you are not paying too much; your agent should keep information about your personal situation confidential to the extent that it might place you in a poor negotiating position; your agent should advise you that you have the right to certain inspections or certifications to which you are not automatically entitled. Further, your agent must disclose to you any information the seller or landlord or their agent lets slip that could give you a step up in negotiating a better deal. Now, for both, it is important to realize that there is certain information which should never be disclosed. There are laws directed at "stigmatized properties". Such properties, for example, would include those in which a murder took place or an occupant died of AIDS. In these cases, the information pertains to people; not properties. If the property was in a flood plain or on an earthquake fault line, that pertains to the property. Information about the property, even (or especially) if adverse, must be disclosed. Information about the occupants cannot be disclosed. As an agent, if a renter or buyer asks me if any prior occupant died of AIDS, I must refuse to answer. It is a violation of law to disclose that information. If I, as an agent, fail to tell a buyer or renter that the house had a wet basement, I could be liable, but I cannot even be sued for failing to disclose information about stigmatized properties. In the old days, the seller or landlord paid the commission and the agent represented that party. Agents spent a lot of time working with buyers and renters "helping" them find a suitable property, never telling them that they represented the other side in this transaction. Now, that is considered unfair. So, that all parties must have a written agency disclosure. In the absence of written disclosure, an agent working with a buyer will be presumed to be representing the buyer. For a buyer or renter, hiring an agent means that you truly have someone in your corner. Your agent should negotiate a fee for services and a method of payment as well as a description of services. For example, you may be able to expect your agent to set down the features you want in a home including bedrooms, price & location. Then, your agent may be required to conduct a multiple list search at least weekly and to report the findings in writing or by phone. This may go on for a period of say a month or three months. You may be required to pay something in advance, something at closing or both. Your agreement may state that you are responsible for the fees or any portion of the fee that the seller or landlord is not willing to pay on your behalf. The result may be that you pay nothing out of pocket. Sellers & landlords still get the same benefits they always have. Their agents generally advertise, hold open houses, analyze and present offers and help close the transaction. So, why would a seller or landlord be willing to pay the buyer's or renter's agent? Simple economics... they don't always have the money. But, in exchange for paying that fee and allowing buyer brokerage, much of the liability is shifted to the buyer/renter's agent. If your own agent forgets to tell a buyer that you have a wet basement, you and your agent can be held responsible. But, if the information is disclosed to the buyer/renter's agent and that agent fails to disclose the information, it is that agent who is at fault. And, the fact is, that the fee you pay to the buyer's or renter's agent is generally the same or comparable to the fee you would have paid to a cooperating agent or subagent under the old ways. The buyer's or renter's agent replaces the cooperating agent. One other point to remember is that it is currently illegal in Maryland for an agent to represent both parties in a real estate transaction. So, once a buyer or renter hires an agent, that agent can no longer show his or her own listings to that buyer. Let's face it, the way we used to do business was a fallacy. Agents drove buyers and renters around in their cars, sometimes for days. They became friends. They ate together. The buyers / renters believed the agent was "helping" them and the agents had a hard time remembering that each home they set foot in created a new agent/client relationship in which they represented that seller or landlord against their newfound friends. The new way allows everyone to love the one they're with.
.... For Renters When renting a home or apartment, insurance is an inexpensive protection against a number of perils. First and foremost, the Landlord's insurance does not cover the renter's furniture or other belongings against fire or theft. Unless there is negligence on the part of the Landlord, it is not likely that the renter will collect from the Landlord for damage or loss of any sort. Fires and thefts do happen. For a cost of about $200 per year, a renter can have peace of mind... seems a small price to pay. Renter's insurance is a variation of homeowner's insurance. Homeowner's insurance covers some losses outside the home. For example, if your car is broken into, the antique 8-track collection stolen from the trunk or the notebook computer taken from under the seat is not covered by the auto policy.. these are homeowner's policy claims. If you rent and don't have renter's insurance, you're not covered. Finally, there is liability coverage included in the renter's policy. This covers the renter against lawsuits when the kid who delivers those unwanted newspapers trips over your sprinkler hose or the mail carrier falls down the steps on the skateboard. Negligence suits are a real threat and the owner's coverage protects only.. you guessed it.. the owner. .... For Landlords Rental property is insured as a business whereas a personal residence is covered under a homeowner's policy. There are a few basic differences. The main difference is that a homeowner's policy covers furniture, but landlords generally remove their furniture. The renter's furniture isn't covered. Business property carries a greater liability, so the cost of the liability coverage offsets the savings on the furniture coverage. As with homeowner's insurance, the Rental Dwelling Policy offers an option for Replacement Cost Coverage. This means pretty much what it's name implies. If there's a loss, say due to a fire, the cost of the repair or replacement will be covered. Without this coverage, the age of the component (carpet, cabinets, the walls themselves) will be depreciated. So, if, for example, the insurance company says the kitchen cabinets have a useful life of 20 years and the fire happens when the property is 10 years old, the $8000 replacement will result in only $4000 coverage (less your deductible). This is because the cabinets had already lived half their useful life and only had half left. The insurance company pays only that half remaining. With Replacement Cost Coverage, if the fire happened after 22 years, when the cabinets were beyond their useful life, the new cabinets would be paid for by insurance (less the deductible). The savings does not justify the election to forego the Replacement Cost Coverage. In the case of a fire or other insurable disaster, the depreciation can easily result in a payment thousands of dollars short of the amount needed to restore the damage. Another option offered to landlords is Loss of Rents. Now, this doesn't cover losses due to vacancies or delinquent rents. The purpose of this coverage is to provide an income to the landlord during the period of restoration. Fires can take from a few months to a year to repair. Meanwhile, there's no tenant making payments yet the mortgage company still wants its payments. This coverage will generally provide something in the vicinity of 80% of the rental income. Since there is no maintenance or management during this period, that is the net equivalent to full payment. Again, this is a very inexpensive and worthwhile option. Finally, when utilizing the services of a management company, landlords should ask that the insurance provide liability coverage for the agent. When there is a liability suit, the landlord and the agent will be named as defendants. There should be no need to have separate coverage. Most insurance carriers will add the agent at no cost and many have the agent named in the pre-printed form. Both Rental Dwelling Policies and Renter's Policies are available through any major insurance carrier. Often, we are asked if owners of condominium units need to get insurance. Invariably, we say, "Yes." The association may have coverage for the major structure, you may need to cover interior walls, paint, cabinets, fixtures, carpet and the like. You will also need liability coverage. Suppose you cause the fire... do you think you might be held liable even if only by the association's insurance company? And, what about the loss of rents coverage? Yes, get a policy for your condo. |
