Landloard/Tenant Q&A: CARL L. FRAZIER, B, (R), PB, RMP

CARL L. FRAZIER, B, (R), PB, RMP
Owner, Principal Broker
Cornerstone Properties
Past President, Oahu Chapter
National Association of Residential Property Managers and National Conference Speaker

Q. Thanks for taking my questions. My first question is, am I responsible for spoiled food if the refrigerator breaks down? And is there a cap on rental increase? Thank you.

A. Interesting questions. The first question actually comes up more often than you would think. If you look at Standard Term B-6, tenants are responsible to maintain and properly use and operate appliances. Term B-8 states the following–

Notice of Defects: if TENANT notices any defects in the Unit which are NOT TENANT’S duty to fix, TENANT must notify LANDLORD immediately upon discovery of defect.

Any damage caused by TENANT’S failure to report any defect is TENANT’S responsibility.

So, what do we do when we get the call on Friday afternoon at 5:15 p.m. from the tenant complaining that their refrigerator is not cooling properly? And it’s been that way all week and $500 worth of groceries are spoiled … and they want someone out there tonight?

First, keep calm landlord! Let the tenants know several things right off the bat. First remind the tenant that they should have notified you immediately when they had a problem. Then they are going to ask, “What about my food?” Direct their attention to Standard Term B-5, which states, “Insurance. TENANT understands that LANDLORD’S insurance does not cover TENANT’S belongings (Yes, food is considered belongings…) or damage caused by TENANT. TENANT agrees that LANDLORD is not responsible for any loss or damage during the term of this Rental Agreement. TENANT is advised to carry insurance covering all of TENANT’S property located in the unit. In any event TENANT shall bear full responsibility for any loss or damage to TENANT’S property including any loss or damage from fire, water, theft, or any other cause.” In other words, no…the tenant is responsible for their own food…. Sending a repair man when notified late on a Friday afternoon is not reasonable (since they knew for a week). Simply let the tenant know that you will be contacting a repairman immediately or early the next morning. Just about every Property Manager I know who has been doing business for a while will testify that they have had a similar case before…so don’t feel alone. Do your best to get someone there quickly.

Let’s consider rent increases. If you have a month-to-month lease then you may increase the rent with a 45-day written notice.

If the lease is a fixed lease, you cannot raise the rent until the lease expires. Then upon renewal, you may increase it. How much can you increase it? There is no limit. However, the question now becomes, will the tenant pay? A good rule of thumb is to check the market first and see how much similar units are being rented out for. Many owners want to increase the rent to cover increased costs. You can’t always do that. If there is a spike, for example, in your maintenance fees and it goes up $200 a month…chances are tenants with move out rather than pay the higher rent. Be fair, be at market value, or you will have a vacant rental.

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