taner-ardali-806-unsplash - Landlord

What Are Landlords Responsible For?

Many people rent rather than own their homes. If this is true for you, you depend on a landlord to maintain your residence in good working order. At a minimum, landlords are responsible for ensuring homes are habitable and safe.

The legal definition of habitable means the structure should be weather-tight with functioning heat, electricity, running water, and sewer or septic. In the middle of summer in Ukiah, you may believe that air conditioning is required to make a place habitable (I’m inclined to agree with you), but legally, air conditioning isn’t required.

Under a normal rental or lease agreement, responsibility for maintaining habitability cannot be passed on to the resident. It is the owner’s obligation not only to have everything in good working order when residents move in, but throughout the term of the lease.

This means landlords must attend to repairs in a timely manner; however, “timely” means different things to different people, and different situations call for different responses. Emergencies require immediate attention, while lesser problems can wait a day or two, or sometimes longer. This is where we employ the Prudent Man Rule (also known as the Common Sense Rule). What is prudent in this situation? What makes sense?

A slow drip in the bathroom on a Saturday night is an incredible annoyance, but probably doesn’t justify a 3:00 am call to the plumber. On the other hand, if sparks are flying from the breaker box, go ahead and make an emergency weekend call. (As a practical matter, the resident should know how to shut off electricity to the house.) The same logic goes for a broken gas line. Keeping in mind that the resident may have no way to contact the owner at 3:00 am, he or she must take some personal responsibility and address the gas leak immediately, then deal with the payment issue with the landlord later.

Who pays for emergency maintenance depends on two things: the cause of the problem and whether the issue was serious enough to warrant emergency action. One of my favorite sayings applies here: “Poor planning on your part does not constitute an emergency on mine.” If a gas line breaks because the resident backs his car into the meter, that’s on him. If a buried gas valve reaches the end of its serviceable life—which only seems to happen at the most inconvenient possible times—that’s the landlord’s responsibility.

The more details are spelled out in the lease agreement, the better. Who cares for the landscaping? Who is responsible for brush removal for fire safety? Many contracts call for appliance repair to be the responsibility of the resident, since appliances are not a habitability issue. If the contract isn’t explicit about who should maintain the appliances, maintenance falls to the landlord.

The type of the residence can also determine who is responsible for what. It may be perfectly reasonable to include landscaping upkeep as part of a lease agreement on a single family home with a small yard, but ridiculous to ask someone renting a small cabin on a 200-acre ranch to mow the whole property on a regular basis (unless the resident is compensated for that time with a reduced rental payment). As is always the case in these situations, it really helps if you read and understand the lease agreement BEFORE you sign it.

Although some maintenance issues are negotiable, safety issues are not. Landlords must install and maintain smoke detectors and carbon monoxide alarms. These are incredibly important (and inexpensive). Less immediate but also important are issues related to sewer or septic, mold, and dangerous but difficult-to-see hazards like small cracks inside the chimney. Landlords should inspect residences periodically for obvious and not-so-obvious threats.

Whether you’re a resident or a landlord, my best advice to you is to communicate to clarify expectations and avoid misunderstandings.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Avoid Scams

Most of us think we won’t be duped by a scammer, but these people are good at what they do and desperation sometimes causes us to bypass our common sense. With the rental market in Ukiah as tight as it is, people are frantic to find a place to live, which can cause them to take risks they usually wouldn’t consider.

While I’m reluctant to write an article about this—because it will educate scammers as well as potential victims—this is so common now that anyone of a criminal nature already knows about it.

Here’s how the scam works. Let’s say you need to find a place to rent. The last four rentals you called about were rented yesterday, and then you see an ad on Craigslist and it sounds perfect. You call the number and a sweet-sounding lady answers the phone. She explains that the house was listed for sale, but the listing expired. She gives you the address but insists that you NOT talk to the real estate company. She says she’s not happy with her agent and does not plan to re-list.

She apologizes that she can’t meet with you because she’s on the East Coast with a dying relative, but suggests that you go by the property and peer in the windows. If you like it, send a check for the security deposit and first month’s rent.

On move-in day, she says she’ll have a friend meet you at the residence with the keys. You give notice at your current residence and prepare to move. You pack up everything you own and call your five best friends with pick-ups to bring your belongings to your new home, only to discover the house is already occupied by the people who bought it and closed escrow two days ago.

Bottom line: your $3500 is gone and everything you own is in the back of friends’ pick-ups. I would like to tell you what to do in this situation to recoup your money. Unfortunately, I can’t because there is no way to know where to find the scammers who took your money and ran.

The best advice I can give you is to be skeptical. If someone is not available to meet you at a property and provide you with access to the interior, that should raise a red flag. Even then, things can go wrong. The current tenant can pose as the homeowner and run the scam. When your Spidey sense (think Spiderman) starts tingling, pay attention. If someone asks for cash rather than a check, be skeptical. If the rent seems too low, be skeptical. If you’re told to peer in the windows instead of getting a tour, be skeptical.

If you want to know who owns the property, ask your Realtor—he or she can check county records and find out. Talk to the neighbors to see what they know.

Realty World Property Management manages about 800 residential units. Right now, as soon as a rental unit is vacated, it is leased to a new tenant almost instantly. This is partly because we keep properties in excellent condition, but the truth is, landlords who do not keep their properties in great condition are also able to rent their properties quickly.

The moral of the story is: if a rental situation seems too good to be true, it probably is.

As a side note on the scam issue, if you’re wiring money when buying a house, be sure you’re sending it to the right account. Realtors’ and escrow company emails have been hacked and the hackers are sending false wire instructions for clients to wire money to. Be aware, get independent verification of wire instructions before you send money. To the best of my knowledge this has not happened in Ukiah…yet.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

Good Fences Make Good Neighbors

 

You may have heard the old adage, “Good fences make good neighbors.” Well, it’s true. Obvious boundaries can certainly reduce frustration and confusion. But good fences aren’t the only things that help maintain good relations. Trying to understand your neighbor’s point of view—and communicating your point of view clearly—can keep things neighborly and help avoid expensive and time-consuming battles.

When it comes to fences, it’s important to put them in the right spot and that’s not always easy to do. Some old, perhaps antiquated laws require property lines to be adjusted to coincide with existing fences, even if the fences were originally put in the wrong place. Property line adjustments have to do with whether the neighbors originally agreed upon erecting a fence somewhere other than the true boundary line or whether somebody made a mistake. So, make sure fences go up where you intend them to.

Figuring out the location is only the first step in putting up a good fence. Next, you must figure out what type of fence you (and your neighbor) need. Clearly, if you live next door to a cattle ranch, the fence you need is far different than if you live near someone in Ukiah’s Westside. If the fence separates two residential properties, it’s a good neighbor fence; in which case, it’s preferable to find fencing—wood or other material—that looks good on both sides. Typically things go best if both property owners sharing the fence agree on the material and split the cost of the fence. That way, everyone is invested in the success of the project. Unfortunately, agreement on what type of fence gets tricky when you want the same type of fence on all three property boundaries but your neighbors all have different types of fences. At this point, all I can say is: good luck! In the event that your fence needs repair, the law requires that both parties contribute to the cost. Of course, there will always be extenuating circumstances.

In choosing a fence, needs may differ. You have a Chihuahua and your neighbor has a Mastiff (a little bigger than a small pony), for example. You’re concerned about gaps between and under the boards, and your neighbor worries that eight feet may not be tall enough. The bottom line for fence building is the same as for almost all other matters concerning your neighbors: be considerate and talk to your neighbors and most problems can be solved without too much heartache. While you’re talking about your fence, you might also bring up the fact that their beloved Fido likes to bark at 3:00 a.m., and would he perhaps be happier spending nights in their garage rather than in the side yard adjacent to your master bedroom? It’s worth a try.

Once the fencing situation is resolved, and your neighbors’ dog is sleeping in their garage, it’s only fair that you remind your teenage son that his band, The Racket Makers, must call it quits at 10:00 p.m. on Friday and Saturday nights (earlier on weeknights). Any music your neighbors can hear from your garage while they are inside their house should end at a reasonable hour—unless you’re throwing a party and everyone on the block is invited.

I’ll share some more neighborly ideas next week.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

Happenings at the Hospital: Ukiah Valley Medical Center Expands

I’m on the Ukiah Valley Medical Center (UVMC) Community Advisory Board, and at a recent meeting we received an interesting update on the hospital’s expansion. In case you’re curious, here’s what’s going on.

The hospital is building a new emergency department (ED) and intensive care unit (ICU) to be completed in 2017. The original ED, built more than 30 years ago, was designed to care for 25-30 patients a day. They currently see 80-100 patients a day in that 3,500 square foot space. The new ED will be 14,700 square feet with 19 private treatment spaces, including exam rooms, specialty treatment rooms and trauma rooms (which are like mini-operating rooms).

A lot has changed since the hospital moved to its current location in 1980, including technology and the expectations around privacy. The current ED separates patients with privacy curtains. Sadly, sound goes right through those curtains, so while you cannot see what’s happening in the “room” next to you, even with hushed voices you can certainly hear plenty. All that will change with the new design.

Getting into and out of the ED will be easier, too. A little roundabout will make it easy for people to drive right up to an entrance for walk-in patients and a separate ambulance bay will allow critically ill patients to quickly receive the appropriate level of care.

The new ICU will increase capacity by two rooms, going from six to eight. While this may not sound like a big deal, it is an enormous step up in terms of space, efficiency, comfort and safety. The hospital has done a bang-up job in thinking through the workflow. In fact, before they finalized the ICU room design, they created a mockup of one of the ICU rooms in their conference room to figure out the best layout—minimizing steps and maximizing visibility so nurses can see patients at all times.

The new rooms will make an ICU stay significantly better for those who require the hospital’s highest level of care. First, the rooms are much bigger, allowing space for a sofa bed so a family member can stay overnight. Each room has its own HVAC system, so it can be individually controlled for temperature and humidity.

The ICU rooms will also have a collapsible glass door, allowing a doublewide entry to each room so a patient on a gurney can be side by side with a nurse and a ventilator, for example. Right now, the doorways are wide enough for a patient on a gurney, but if they require large equipment, it’s quite a puzzle to get everything lined up to go through the doorway. Nurses do it all the time, but it’ll be great when they don’t have to.

As part of the ED/ICU construction, the hospital will create a circulation corridor to be used by dietary, housekeeping, and for transferring patients between hospital departments. Right now, everyone uses the same hallway, making it crowded and none-too-private.

When UVMC decided to renovate, they invited local vendors in to see who might have the expertise and capacity for a project like this. I commend them for using as much local labor as they can. Ernie Wipf’s company has been busy on the utilities, Valley Paving is laying the foundation, and other local companies are working on this, too. Hospitals are highly regulated, and under the oversight of OSHPD, making construction expensive and slow going. Recently, after the plans were approved by OSHPD, the hospital had to tear out a massive, rebar-reinforced, concrete foundation for an oxygen tank because an OSHPD inspector said so. Glad the hospital is committed to its mission. After that experience, I think I’d be tempted to walk away and wash my hands of the whole thing.

If you have questions, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Buyers Aren’t Liars

There’s a phrase every Realtor has heard and many believe: buyers are liars. Realtors representing buyers sometimes feel misled when buyers change their minds or reveal information later that would have been helpful earlier.

As a buyer, it is unlikely that you hire a Realtor with the idea, “Hey, I’m going to lie to this person so they are less effective on my behalf.” And yet, it seems to happen a fair amount. If buyers know what questions to ask themselves, their Realtor, and their lender up front, they are more likely to get clear about what they’re looking for and to remain consistent throughout the buying process, resulting in less frustration for everyone.

Buyers first need to be honest with themselves about the type of house they can see themselves living in. To do this, they need to make a list with three columns under these headers: must-haves, needs, and wants.

Must-haves should be a list of the attributes that you, the buyer, cannot live without. If you are a contractor and your home serves as your office, you must have enough property to store your equipment. If you are a doctor, the hospital where you work may require that you be able get there within twenty minutes of an emergency call. If you work for an organization with territories or jurisdictions, you may be required to live in a certain territory or jurisdiction. If you have four kids, you may decide you need at least three bedrooms. If you are wheelchair-bound, the home must be one-story and wheelchair-accessible or easily converted to it. If you commute to work, you may decide that you must be within a certain distance of an airport to maintain a certain quality of life. These are must-haves.

Close cousin to the must-haves are the needs. That contractor we talked about earlier must have space for his equipment, but he also needs a home office where he can get paperwork done. Could he work on the kitchen table? Yes, but he’d prefer not to. That family with four children must have at least three bedrooms—boys in one room and girls in another—but each child would be much happier with his or her own bedroom, so the house really needs five bedrooms. And if you have school-aged children, being in a particular school’s enrollment area could also be a need.

After needs come wants. Do you want a view? A swimming pool? Hardwood floors? Clearly, these items are not as important as whether your whole family will fit comfortably in the new home, but they are still important.

Once you and your family are clear about everything you can think of for all three categories, share this information with your Realtor. He or she can filter homes for sale so you don’t waste your time looking at properties you would never buy.

After you’re clear about the property you want, ask your Realtor about neighborhoods with homes in your price range. What is the median price for houses in the neighborhood? Who lives here; is it quiet or full of rowdy kids? How close are community services and amenities like parks, hospitals, and shopping? Are there any problems you should be aware of?

Finally, get in touch with a lender and ask questions about current loan rates and terms, types of mortgages you should consider, variable versus fixed rate options, rate locks, and how much he or she thinks you can qualify to pay each month.

Armed with all this information, you can communicate clearly and accurately about what you want and need, and your Realtor can help you find the perfect property.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

Foreclosures – A Last Resort for All Parties: Part I

Last week I talked about servicing a real estate loan yourself. That was a prelude to the next couple articles, which are in response to a reader’s question about foreclosures and what other options may exist when a borrower stops paying his loan.

If a borrower misses a mortgage payment, there could be a perfectly innocent reason. Before you do anything dramatic, call the borrower to see what happened: did he forget to make a payment? Did the check get lost in the mail? These things do occasionally happen. If the borrower says the check is in the mail, go ahead believe him the first time, but file this information away for future reference.

Once in a while, a borrower will call to admit a payment will be late or that a personal emergency has prevented him from making a payment this month. While this is rare, again, I’d take him at his word the first time. (If you’re a borrower reading this, take note: lenders are generally much more forgiving when you call them rather than forcing them to track you down about a missing payment.)

As the lender, once you’ve concluded the borrower is no longer making payments on the loan, it’s time to begin foreclosure proceedings. They aren’t fun and they aren’t cheap, but they are sometimes necessary.

Two types of foreclosures exist: judicial and non-judicial, and both result in the public auction sale of the property in question. If you can go with the non-judicial option, it’s cheaper and faster, but depending on your circumstances, it isn’t always better.

A judicial foreclosure requires an attorney and a court order, and it’s the only way to go if flaws exist in the loan documents or the property’s legal documents. Also, if there is no equity in the property but your borrower has assets, and the note involved in the foreclosure wasn’t a “purchase money note” (the note used to purchase the property), then a judicial foreclosure opens the door for a deficiency judgment.

A deficiency judgment helps you get your money back. Here’s how: if the foreclosed property is sold for less than the total amount owed, the court can order the borrower to pay the difference between the foreclosure sale price and the amount owed. If you choose a judicial foreclosure in hopes of recouping your money, be sure the borrower has some assets with which to pay you. If you’re relatively sure he does, once you’ve completed the judicial foreclosure, you can call the borrower into court for an examination of debtor, where you can ask the borrower about his holdings. If he lies under oath, he’s perjuring himself, and courts really frown on that.

Do not go down this path without consulting an attorney and someone who can give you good advice about the true value of your property, because while a non-judicial foreclosure usually takes four to six months, a judicial foreclosure is likely to last at least a year—maybe two. And the judicial option is significantly more expensive.

In addition, the borrower in the judicial foreclosure retains the right of redemption. That means that for the whole time the foreclosure is in effect, the borrower can pay you what he owes you to bring the loan current (paying any outstanding loan payments, late fees, advances plus interest, and fees or costs associated with the foreclosure). In most situations, that’s not a problem, because the property is worth less than is owed and you’d be happy to get all your money back. But here’s the downside: even though the borrower will never pay you what he owes, he still has the option, so you cannot sell the property until the redemption period expires.

More next week!

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

 

Rental Agreement Addendums—Well Worth the Paper They’re Printed On

Last week, I began answering a reader’s questions about lease agreements, specifically about the minimum contract a landlord should consider, what should be included in the contract, and whether a contract is even worthwhile. I reviewed all the issues covered in our lease agreement. This week, I’ll get into the addendums we use—some we always use; others depend on circumstance.

I neglected to mention the reader’s astute observation that, “it seems these days sometimes the tenants have more rights than the landlord.”

I would only disagree with the word “sometimes.” The government values a citizen’s home as almost sacred, and if you allow your property to be used as someone else’s home, know that you are giving up some control over that asset.

To maintain as much control as you can, I recommend being as explicit as possible about hazards and where responsibility lies for repairing or maintaining the property. Our property management division helps property owners protect their property with several addendums to our lease agreement, including the following:

  • Lead-based paint disclosure – before 1978 paint contained lead. When lead was prohibited, old paint did not vanish into thin air. It remained on shelves and in warehouses, where contractors sometimes found it and used it. Consequently, regardless of the age of a property, we use this disclosure for all leases.
  • Mold disclosure – mold spores exist and the way you care for a home can either help mold grow or keep it at bay.
  • Prop. 65 disclosure – so far as I can tell, everything has chemicals known to the State of California to cause cancer. I am confident your property is no exception.
  • Combined hazards disclosure – the California Environmental Protection Agency publishes an excellent guide covering asbestos, formaldehyde, radon, hazardous waste, carbon monoxide and more.
  • Unlawful activity addendum – in today’s world, we’ve resorted to this addendum to let tenants know that they are responsible for their own behavior as well as that of any guests. Just because the guests didn’t sign the lease agreement doesn’t mean the tenant isn’t responsible for enforcing its rules.
  • Bed bug addendum – this lets folks know how to avoid bringing bed bugs into your property, and that it is their responsibility to keep your property bed bug-free.
  • Ag disclosure – if your property is within 300 feet of agricultural land, this disclosure let’s them know there are a few downsides: noise and chemical spraying come to mind.
  • Grilling addendum – this addendum falls under the heading, “Common Sense” and requires people to follow the manufacturer’s instructions in operating indoor and outdoor grills.
  • Pet addendum – if you allow pets, be specific about how many and what kind, and be clear that the tenant is liable for any damage caused by pets.
  • Satellite dish addendum – courts have determined that tenants have a right to a satellite, but the addendum protects the landlord by requiring the landlord be involved in where the equipment is installed and who is responsible for removing it if/when the tenant vacates the property.
  • Welcome letter – this letter provides an overview of the tenants responsibilities and reminds them when their rent is due, that they need to put the utilities in their name, and how to get in touch in case of emergency.
  • Move-in checklist – this checklist requires the tenant to thoroughly review the interior and exterior of the property, and notify the landlord of any flaws or problems to eliminate disagreements when the tenant moves out.

These addendums contain excellent information, but they do you no legal good if you don’t make sure the tenant signs a document agreeing to the conditions. Your property is valuable. Don’t skimp on paperwork.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

Why Rental Agreements Beat Handshakes

While I like the idea of confirming an agreement with a handshake rather than a contract, I’ve seen a few too many handshakes turn into fisticuffs to recommend them, especially when the agreement involves an asset worth several hundred thousand dollars. This week’s column is dedicated to answering questions from a reader about how to minimize the paperwork involved in renting your property, or more to the point, why you shouldn’t.

The reader asked, “What is the minimum paperwork (contract) a landlord should have a tenant sign? What should be included in the contract? How important is it to have a contract? What are the legalities? What if no contract has been signed?”

Given the value of the property you’re allowing a tenant to use, I’d rather focus on all the things a lease agreement should include, rather than figuring out the minimum contract you can get away with. While the law doesn’t require a contract when leasing for less than a year, why wouldn’t you protect your asset?

Our lease agreements include provisions that cover the following:

  • Property address
  • Term of agreement (when it starts and ends)
  • Cost of rent
  • Who pays which utilities
  • What the property will be used for and by whom
  • Whether pets are allowed
  • In a multi-unit property, what the house rules are (e.g., noise, parking, etc.)
  • Adhering to state and federal laws
  • The tenant’s responsibility for the actions of guests
  • Whether the tenant is allowed to sublet
  • If the tenant stays past the end date of the contract, that the contract remains in force
  • Who is responsible for what maintenance and repairs
  • Whether the tenant is allowed to alter the property (e.g., paint, renovations)
  • Clarification of who is responsible for damages
  • Under what circumstances the landlord may enter the property (how much notice, etc.)
  • A prohibition on the tenant re-keying the property without approval
  • A prohibition on tampering with smoke and carbon monoxide detectors
  • Clarification that the tenant must insure his own personal property
  • What happens if the landlord does not deliver possession of the property, as promised
  • A prohibition on having illegal drugs in any form on the property (including medical marijuana)
  • What happens if either the tenant or the landlord does not live up to his or her end of the agreement
  • What happens if a tenant only moves half way out: vacates the premises but leaves enough personal property that it isn’t clear whether the property is occupied
  • Clarification that the tenant can expect his or her personal information to be used to run a credit report
  • What happens to the security deposit, and that it cannot be used as the last month’s rent
  • A clause about attorney’s fees stating that the prevailing party pays for legal fees up to $1,000
  • A standard waiver stating that if part of the lease becomes unenforceable, only that clause is void—the rest of the agreement remains intact
  • Notification of legal notices: where to send them and how (e.g., certified mail)
  • Clarification that if the landlord waives a right, it is only that right that time (allowing your old dog to move in with you does not permit you to adopt a wild puppy when your old dog passes away)
  • Megan’s Law Disclosure: a notice stating you can go online to determine if any sex offenders live nearby (UPD has a program called Nixle that will send you notices about all kinds of interesting safety and law enforcement facts—at ukiahpolice.com)
  • The procedure required to terminate the contract

I’ll share information about addendums next time.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

 

 

Environmental Assessments – Part 2

Last week, I introduced Environmental Site Assessments and the cost to address any issues found (called remediation): Phase 1, Phase 2, and Phase 3. I reviewed the first phase, so this time I’ll review the last two phases.

As a brief refresher, the whole reason for the assessments is to determine whether a property is contaminated and what it will take to fix it. If you’re an investor or lender interested in commercial property, you don’t want to get stuck purchasing (or foreclosing on and owning) a property that will require expensive remediation to address the ills of a bygone era.

We’re talking about anything from a little fuel from a leaky tank or asbestos in ceiling tiles to toxic chemicals disposed of in a way that puts people, animals, or the environment (or your bank account) at risk.

Remember, during a Phase 1 assessment, an investigator will review county records, make a few phone calls, check out the neighboring properties, and try to determine whether contamination is likely. Phase 1 is, for the most part, a paperwork investigation. Many investigations never need to go beyond Phase 1.

A Phase 2 assessment means something from Phase 1 raised an eyebrow. Determining the validity of any potential exposure gets expensive. We’re talking about contractors and engineers taking building material samples, as well as soil samples and water samples at various depths. If all goes well, Phase 2 tests will indicate no contamination and you can kiss then contractors and engineers on the cheek, pay them with hefty checks, and wave goodbye. If contaminants are found, you begin the next phase of your adventure.

Depending on the Phase 2 findings, recommendations will vary. At the very least, you’ll probably be required to install monitoring wells to determine the amount and disbursement of the contamination and whether it’s moving. If it’s moving under your property from one of your neighbors, you may have recourse against the neighbor, but you’re probably not off the hook.

The opposite extreme of monitoring wells in terms of expense (and environmental concern) is complete remediation: welcome to Phase 3. If you thought the wells were expensive (and I’m sure they were), wait until you have a backhoe digging a hole in the middle of your property 50 feet across and 30 feet down (2,750 yards of contaminated dirt-_- that over 250 dump truck loads). And all this dirt goes to a special landfill rated to accept the type of contaminates found in your soil. These landfills charge by the yard of material. This situation is rare, but it does happen.

This helps explain why prospective buyers of suspect properties do extensive testing before taking title, since liability can run to the current owner. It also helps explain why lenders want environmental assessments before lending on suspect property, since their ultimate recourse on a loan is foreclosure and potential ownership of the problem.

By the way, environmental studies don’t happen overnight, nor are they cheap, but they are far less expensive than the possible ramifications of acquiring the property without one.

If you have questions about real estate or property management, feel free to contact me at rselzer@selzerrealty.com or visit our website at www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

Who Pays for What: Renters v. Landlords?

Before I jump into the topic of who pays for what on a rental property, let me say that contracts trump all. If you sign a contract that gives away your rights or requires you to pay for uncommon expenses, it doesn’t matter what’s “typical.” You have to comply with the contract.

When you own a rental property, you are expected to pay for upkeep resulting from general wear and tear. For example, you are expected to repaint every few years and replace carpet every several years. You are expected to take care of safety hazards and problems that make the house uninhabitable such as faulty electrical wiring, a malfunctioning sewer system, broken appliances, and inadequate heating. You are expected to patch the roof if it leaks and call the gas company if there’s a funny smell coming from the propane tank.

Renters, on the other hand, are expected to fix things they break (or that break as a result of actions by people they invite to the house). They are also expected to maintain cleanliness inside and out, which may include yard work.

While this sounds wonderfully black and white, it isn’t. Property management companies try to clarify the relationship between landlord and renter as best they can, while providing services for both. Property managers charge landlords a service fee that includes a wide range of offerings, often including the following:

  • Marketing (to get the property rented)
  • Thorough application processing
  • Rent collection
  • Preparation and posting of notices
  • Property inspections
  • Management of inquiries, service calls, and complaints
  • 24-hour emergency service
  • Itemized monthly statements
  • Expense management (ensuring taxes, mortgage payments, and insurance are paid on time)
  • Property maintenance

Property managers often charge for coordinating repairs because that coordination takes time. Landlords who choose not to employ property managers and do not care to deal with maintenance issues will sometimes allow the renter to coordinate a repair and deduct the cost of the repair from the monthly rent. While this may seem like an equitable arrangement, you have to ask yourself: is it fair that the renter was not compensated for the time it took to coordinate the repair? And the murkiness begins.

Property managers inspect rental properties periodically for safety and habitability. However, they (or the landlord) can’t just stop by and ask to tour the place because they were in the neighborhood. If, during a scheduled inspection, the property manager believes the renter could easily be featured on the television program, “Hoarders,” the renters can be evicted.

Another not-so-black-and-white area is the definition of “emergency.” On behalf of landlords, property managers must address emergencies immediately, but property managers and renters sometimes define “emergency” quite differently.

True emergencies affect the safety or habitability of a property, like a burst water pipe, a plugged sewer main, or no electricity or heat in winter. Inconvenient non-emergencies include a dripping faucet that’s driving you crazy, one burner on the stovetop that isn’t working, or an air conditioner that will only cool the house down to 90 degrees on a 110-degree day.

Some common questions from renters include:

  1. Q: I locked myself out. Can you come and let me in?
    A: Yes, the property manager will let you in. If you require assistance on the weekend, there’s often a bigger service charge than there would be during the week when the office is open. If someone has to be paid overtime to let you in, you’ll probably be on the hook for that expense, rather than simply paying for the cost of a key replacement.
  2. Q: My smoke alarm is chirping; is it broken?
    A: No, your smoke alarm’s not broken, but it does need attention. The battery is likely low and letting you know it’s time for a replacement.
  3. Q: My electrical outlets aren’t working. Can you come right now?
    A: Yes. It’s likely a tripped breaker, but if you don’t want to mess with the circuit breaker, the property management’s maintenance team can.

If there’s something you would like me to write about or if you have questions about real estate or property management, feel free to contact me at rselzer@selzerrealty.com or visit our website at www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.