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Economy & Business

As rental demand increase, we look at what prospective tenants should know

This article first appeared in the St. Louis Beacon, Dec. 12, 2011 - One of the goals of the Federal Housing Administration has been to have as many Americans as possible own their own homes. As President George W. Bush said in 2002, "We can put light where there's darkness, and hope where there's despondency in this country. And part of it is working together as a nation to encourage folks to own their own home."

In recent years, however, since the housing bubble burst, this goal has been re-evaluated. According to a report issued to Congress last winter, the FHA will maintain its traditional role as in ensuring affordable mortgages but will renew its commitment to affordable rental housing.

Census data and Real Estate Information Services show the proportion of U.S. households that own homes is hovering around 65 percent, whereas the number in recent decades has been closer to 70 percent.That leaves 35 percent of the population in rental property. According to a recent study released by Harvard University, "From 2006 to 2010, the number of renter households jumped by 692,000 annually on average, to 37 million, while the number of owner households fell on net by 201,000 annually. This is a complete reversal from the preceding decade and a half, when homeowners drove the vast majority of household growth and the number of renters stagnated."

As more people look for places to rent, we asked area exports for tips for renters. Here are five of the things renters are advised to remember:

Keep a Paper Trail

If the motto of real estate is "Location, Location, Location," the motto of renting is "Documentation, Documentation. Documentation." Nearly all solutions and hassles begin or end with possession of the proper documents. Of the four points that follow, all go back to this point in some form or another. And documentation begins even prior to the signing of the lease.

In the early stage of a rental process, potential tenants are judged according to information about them found in credit and criminal background checks. False, mistakenly untrue or unexplained background information could lead to never finding a landlord who is willing to rent. Under the U.S. Fair and Accurate Credit Transactions Act, a person can check his or her credit history for free once annually (a suggested place is AnnualCreditReport.com). CaseNet is a tool for quickly checking legal history.

Read. The. Lease. While Missouri statues provide some protection for tenants from unconscionable lease agreements, it would be best to avoid such situations and courtroom hearings. If any language is unclear or you want to make a change for any reason, do so before signing. And check to see if the lease requires tenants to assume the cost of lawyers should disagreements arise.

Property is in Possession of the Tenant, Not Landlord

Once the lease is signed, the tenant has possession of the property. This has several implications, most important is that a tenant cannot be removed/evicted as long as the lease is in effect unless by court order. If a landlord tells a tenant to vacate, the tenant has full rights to stay in the rental property until a court order has been presented.

Susan Alverson, of Legal Services of Eastern Missouri, points out that proper notification from a landlord to a tenant is crucial to begin eviction. Once notification is established -- through mail, emails or postings -- the landlord can file a lawsuit and obtain a court order. While this process is underway, the landlord cannot turn off utilities, change locks, remove property or otherwise infringe on the tenant's home.

Tenants should know that having an order of eviction against them will make it rather difficult to rent elsewhere.

The right of possession means a landlord cannot enter a property without notification. Reasonable notification is usually anything more than 24 hours and includes several forms of contact. Right of possession is continual throughout the terms of the lease. Even if the property is sold, foreclosed on, or otherwise picked up by another entity, the lease is seen as part of the property.

Since 2009, even banks that acquire homes with tenants must honor the terms of the lease or give the tenants 90 days to find a new home. This protection is set to expire on Dec. 31, 2014.

Payment of Rent

Disputes over rent often lead to landlords beginning the eviction process. Renters should treat their payments as they would any large transaction, with proper paperwork in the form of receipts, invoices and letters. In other words, do as many landlords do and treat it as a business.

Having proper records of paid rent is extremely helpful. Alverson says, "Any dispute over rent could arise, either because the landlord is not organized or the check never made it in the mail. In all cases it is important to have proof of paid rent." Also, only at the end of a lease term can rent be increased.

Renters should keep their records for five years because that's the length of the statue of limitations in these cases. An old landlord can bring a case concerning non-payment of rent even if the tenant has been out for several years.

Conditions of Living

The landlord-tenant law system was developed from an agricultural society. In its early years, the tenant was saddled with much of the burden of maintenance. During the late 1960s, court cases led by groups such as the Neighborhood Legal Services Program, challenged this system. Rulings in cases such as Brown v. Southall Realty (1968), Javins v. First National Realty (1970), and Lindsey v. Normet (1972) led to a shift in the how rental property is viewed.

Peter Salsich of Saint Louis University describes the current relationship between landlord and tenant as more akin to the innkeeper and someone who wants a room. With this view have also come standards of living and condition codes enforced by the city.

These include weather protection, plumbing facilities, gas, maintained grounds, sanitary rooms, proper kitchen and bath accommodations and security. All must be inhabitable and in working order; but keep in mind that a reasonable package of services is not an perfect package of services. If a landlord is not upholding city standards, a tenant can go to city enforcement to report problems, at which point the landlord must address the problem.

The landlord cannot retaliate for a tenant reporting a dwelling that is not up to code.

Another issue relating to living conditions, the cost of repair and deducting rent. This is an area tenants almost never get right and often leads to disagreements and sometimes legal action. A tenant can deduct up to $300 from rent for a repair or service performed to the rental property, but such decisions cannot be done arbitrarily.

Brendan Roediger of Saint Louis University's Civil Advocacy Clinic suggests following these steps:

  • a) Notify landlord of the problem,
  • b) Provide reasonable opportunity for landlord to address problem,
  • c) Notify again (all of this goes back to documentation),
  • d) Hire a trained professional that charges market rates for service to fix problems,
  • e) Document the problem, the repair and the professional's credentials,
  • f) Deduct from rent.

Deducting from rent is a high risk proposition. And tenants who want to go through with it, should know that these steps are critical to avoid proceedings or a lengthy fight.

Security Deposit

The security deposit is one of the first items to be put down and the last items to be picked up, if one is so lucky as to pick it up. In Missouri, the security deposit can be no more than two times the monthly rent.

Once the deposit is handed to the landlord, the tenant is not entitled to its return until after he or she moves out. After fully vacating the premises, a written request should be made for the security deposit.

Alverson advises following these steps to ensure you get your deposit back: remove all items, clean the unit, take photographs of every room, and have proof of returned keys with key receipt (provides clear cut off). After this, a formal written request for the security deposit can then be made.

These five points only go into brief detail about the most common rental issues dealing. The experts said that many issues can be resolved or outright avoided if key principles such as always documenting are practiced.

Drew Canning was a Beacon intern. 

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