LAURENE H. YOUNG, (B), MPM, RMP, REALTOR
Young Hawaii Homes, Inc.
2011 President, Oahu Chapter
National Association of Residential Property Managers
Q. I rented out my unit a couple of months ago, and the tenants signed a 6 month lease. Now they want to break the lease because they said the road noise keeps them awake at night. Can they do that? Someone told me I would have to pay the transient accommodations tax if the tenants are there for only a couple of months. What is that and do I have to pay it?
A. I understand your tenants’ frustration about the noise. However, road noise is beyond the control of the landlord and something readily ascertained by the tenants before they moved in. I assume that the tenants saw the unit before signing the lease and had a chance to look outside and around the unit. Tenants have an obligation to check every item in a rental unit that might be a concern for them. If having a washer/dryer in the unit is important, but there is none in the unit, they cannot move in and then expect the landlord to provide one for them. If they want a quiet neighborhood, they should make sure the road noise is something they can handle. If the tenants are concerned about noise, they should drive by the unit at different times of the day to see what the noise or traffic level is like.
In some markets, rental units are difficult to find and people want to rent “sight unseen” to make sure that they have a place to move into, especially when they are moving from another state. However, that still does not excuse the tenants from using whatever tools they can to find out about the area and neighborhood. If there are freeways or major streets, fire or police stations, bars, shopping areas, restaurants, or parks nearby, there will likely be more noise than if there are only residences. (I would highly recommend having a “sight unseen” addendum, or at least have something written in the rental agreement).
Your tenants are therefore obligated until the end of the fixed lease, unless you or they can find a suitable replacement to take over the remainder of their lease. They may also be responsible for any early termination fees as stated in your rental agreement.
The transient accommodation tax (TAT) applies to a “hotel room or suite, apartment, condominium, house, beach house, or similar living accommodation which is rented for less than 180-consecutive days by and regularly furnished to a transient (a person who has a permanent home elsewhere).” Because your unit was supposed to be the tenants’ permanent home and they signed a lease, you are not subject to the TAT, even if they leave after a few months. For those that do rent out transient accommodations, the taxes that must be paid include the TAT (currently 9.25% on every island), plus 4.5% general excise tax on Oahu or 4% general excise tax on the other islands. The TAT must be paid on the gross rent collected, excluding any GE or TA tax collected from the tenants and also excluding any charges for guest amenities or services (for example cleaning services). The general excise tax is also based on gross rent collected, but excludes any TAT that was paid by the tenants. You should consult a tax professional if you have any questions.
So, I would like to caution all tenants looking for a rental. Make sure to check out everything that is important to you because you are obligated for the term of your lease in these situations. And, landlords can help too by disclosing as much information about the property as possible. This will help you to find the right tenant-property fit and help to avoid problems like this.
Answers to questions in Landlord Tenant Q&A are provided by members of the Oahu Chapter of the National Association of Residential Property Managers (NARPM), an organization that supports the professional and ethical practices of rental home management through networking, education, and certification. The Oahu Chapter, founded in 2004, has become the largest in the nation with 237 registered members.
Disclaimer: The answers provided in this column by Realtors address individual cases and should not be construed as interpretations of the law. For specific information on Hawaii State Law, go to http:// hawaii.gov/ dcca/areas /ocp/ landlord_tenant or contact an attorney.