Rental Property Deposits
So you are out looking for your new home; you are “apartment hunting”. You are working with a great real estate associate who is showing you exactly what it is that you are looking for and you have a couple of great choices to pick from and are ready to make that much anticipated offer. Yo
Earnest Money (Deposit)
u sit down to sign the offer which your agent has prepared for you and as they explain; you are hit with the harsh reality that you will need to come up with THREE MONTH”S rent to move in. WOW, that is a lot of money for a rental. So why is it that landlord’s require so much money; I mean after all you have great rental history, great credit, your income can easily afford the rent and you have no criminal record. Shouldn’t you be able to move in with just first month’s rent and the security deposit. The reality is that the answer to this question under these circumstances is probably “YES”; you should be able to move in with just first and security, you should be rewarded for having good rental history and good credit. In most instances both landlord and tenant would agree to this arrangement. However there are other scenarios more often than not that dictate differently. I would like to discuss the main issues which would prohibit a landlord from accepted the first month and security alone.
1. Many condo boards require a common area deposit equivalent to one month’s rent, or sometimes a predetermined amount. Therefore if the owner accepts the tenant with first month and security and the condo board gets the security then the owner has no deposit for damages on their property beyond regular wear and tear; the landlord would be exposing themselves to potential loses.
2. Many condo boards have what we refer to as rental restrictions. Sometimes these restrictions can cause issues with deposits. For example; a common restriction is that a unit owner may only rent the unit once per year. Sounds great to most owners especially those that occupy their units as primary residences; “Hey, we wont have that transient atmosphere of people constantly moving in and out”. But now look at it from the point of view of an owner who is renting out their unit. “If I rent this property out to this particular tenant and they stay for only 6 months or for that matter any period of time for less than the 12 month lease; in other words if the tenant breaks the lease I am stuck with an empty apartments with no income”. The landlord still has to pay the mortgage (if any), condo maintenance fees and taxes. Therefore, the owner who has such a restriction enforced by his association will be less likely to lower the move in requirements because they would prefer to guarantee the tenants lease performance for the entire term and this way if the tenant does break the lease the landlord can at least keep two month’s rental equivalent and still have the option to seek damages for the remainder of the lease term.
3. The landlord has simply had a bad experience before and is unwilling to take the risk again. Yes, this may seem unfair, as it seems like future tenants pay for the shortfalls of past tenants but it is the reality and a business decision that the landlord ultimately has to make.
In short, although there may be other reasons for the three months move in requirements these will typically represent the main reasons.
However, I will provide a warning for tenants; watch out for those landlords in foreclosure that are just looking to keep your deposits and collect rent until they get foreclosed. So how do you protect yourself. Well, first of all ask your agent to look up any Lis Pen dens against the property, try to find out if the owner is already in default. Also, if you are looking at a two bedroom with a direct ocean view in a full amenity building and the unit has granite counter, marble throughout and a jacuzzi in the master and the owner is asking only 1300 monthly, it may just be too good to be true. Scroll down to read blog on landlord / tenant laws on foreclosure.
My landlord is in foreclosure, what are my rights?
- FORECLOSURE AND WHAT IT MEANS TO A TENANT
As foreclosures have increased in recent years; tenants have found themselves to be major victims of lack of information and much frustration. We hear the same story all the time; “I have been paying my rent and now I come to find out that the landlord has been pocketing the money and not paying the mortgage and now they are in foreclosure”. Naturally, this brings up many issues and questions. First, is the landlord in breach by not paying the mortgage? Second, can the tenant break the lease? Third, what about the security deposit the tenant may have placed with the landlord or perhaps advanced rents paid to the landlord?
These are all valid concerns that a tenant may have and the reality is that the tenant is usually the least informed in such an instance. Well, it looks like finally there is some relief for tenants in this exact situation.
In the past landlord / tenant issues have been governed solely by The Florida Landlord Tenant Act ; however, recently a new law was passed to address specifically tenants in a foreclosure situation.
The Protecting Tenants at Foreclosure Act became effective on May 20, 2009. The new law has several aspects to it and although I am certainly not a lawyer by any means and am not interpreting the law I would like to point out some of the obvious aspects which may be of use to a tenant in this situation.
1. The law will require the purchaser of a foreclosed property at the actual foreclosure (this could be the bank or another party) to give a tenant a 90 day period in which to find a new property to live. This certainly alleviates a ton of pressure and the fear of getting “kicked out” of your home.
2. If the tenant has a written lease the bank that foreclosed must allow the tenant to live out the lease term and in essence become the landlord; unless the home is sold to a new buyer who actaully wishes to occupy the home as a primary residence. In which case the 90 day to vacate clause would kick in. Again, this is a nice peace of mind for the tenant.
Some practical advice for prospective tenants when looking for a property:
1. Check public records for any “Lis Pendens” or action against the property you are considering prior to signing a lease agreement.
2. Know exactly where your security deposit is being held.
3. Use a licensed real estate professional when locating your lease property.
Rental Property Inventory is low…..
At Miami Rent Seekers we specialize in residential real estate in the Aventura, Sunny Isles, North Miami, Hollywood, Hallandale, Bal Harbor, Miami Beach, Brickell and Downtown Miami markets. In recent months we have noticed a significant drop in the inventory levels for available rentals. I believe this may be attributed to several factors which we are noticing in the market.
1. The market is offering excellent rental rates for properties which in the past would have rented for much more.
2. There are many people unfortunately losing their homes to foreclosure, this sector is turning to the the rental market for there housing needs. Increasing the pool of potential tenants
3. Banks are placing REO or Foreclosure properties on the market for sale but not for rent.
4. We are currently in the “snow bird” season; therefore, many owners which have rental properties in buldings which allow short term or vacation rentals will simply take advantage of the increased rental rates for a vacation rental during the season.
In essence all these factors are adding up to a decrease in available inventory.
Our advise is that if you are currently in a rental property and you do not need to move yet, but your lease is expiring, that you simply negotiate a renewal with your current landlord. If you used a real estate agent to locate the unit in the first place, you can simply contact your agent and they will be happy to take care of the negotiations for you. When one of our associates attempts to negotiate a renewal with a landlord on behalf of the tenant they will typically suggest a rate reduction when appropriate due to market conditions; pointing out aspects of the deal like; your “great payment history”, the fact that there will be no down time for rental payments (no waiting for a new tenant), the idea that the landlord will not need to paint or clean the unit for a new tenant.
If you do not need another year, landlords are sometimes apt to renew for a shorter period of time. Again, the agent you originally used should be able to assist you with this process.
If you must move we recommend you contact an agent which is familiar with your desired area and you start your apartment hunt as early as possible. We recommend 45 to 60 days prior to your lease expiration. This will provide ample time and will avoid the pressure situation of having to settle because you are in a hurry. This will also allow proper time for the application process.
In short rental rates are still great; you will get much “bang for the buck”, but your choices may be less than in the past.
Miami Rent Seekers
Getting Your Security Deposit Back on an apartment in Miami
For many renters the subject of the security deposit is somewhat of a touchy subject. Most renters assume they should receive their security deposit back in its entirety as long as there is no significant damage done to the apartment. However, this is rarely true as there are number of factors which contribute to whether or not the security deposit or a portion of the deposit will be returned to the renter when they vacate the premises.
Did You Do Any Major Damage?
Certainly doing major damage to the apartment such as putting holes in the walls, breaking appliances or tearing up the flooring may warrant the security deposit being kept but even in these cases the leasing agent must justify these costs. In other words the leasing agent cannot use one damaged item to justify keeping the whole security deposit. Rather the leasing agent is obliged to determine a cost to repair the item. If this estimate is large enough to justify not returning the security deposit the renter should be informed of the estimated cost of repairing the apartment.
Is Your Apartment Clean Enough?
All apartments should be cleaned thoroughly before the tenant vacates the property. This should include extensive cleaning of all rooms of the apartment including the bedrooms, bathrooms and any common areas. A cleaning should also include cleaning of all of the blinds in the apartment. Blinds can be rather difficult to clean and many leasing agents charge approximately $10 per blind if they deem there is a need to clean these items. This can add up rather quickly if there are a number of windows in the apartment.
Many leasing agents also perform a number of standard cleaning functions when any resident vacates the property. This may include items such as cleaning out the refrigerator, shampooing the carpet or repainting the walls. When these items are required, there is typically a fee associated with each item. In many cases, adding up these required fees results in a number which is likely already approaching the sum of the security deposit. Additionally, leasing agents often only allow for one hour of cleaning services to prepare an apartment for the next residents. This is rarely enough time to complete the work and therefore renters wind up being charged an additional fee at an hourly rate.
Have You Read Your Contract Documents?
Renters who want to have the greatest chance of having a large portion of their security deposit refunded to them should be very familiar with their contract documents. This is important while living in the apartment as well as while getting ready to vacate the apartment. It is important to be familiar with the contract terms while living in the apartment because it can prevent the renter from making decorating choices which are explicitly prohibited by the rental agreement. These types of decisions can be costly in the long run because they may result in the renter being assessed for perceived damages by the leasing agent.
Renters should also carefully review the contract documents as they are preparing to vacate the property. This is important because it may help the renter to clean and make repairs to the apartment in accordance to guidelines set forth by the leasing agent. Doing this will make it much more likely the renter will not be assessed exorbitant fees at the conclusion of the rental agreement.