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Rent it Right

by Janet Portman, Inman News

landlord helpQ: Our lease says that we can renew our lease for another year, “at market rates.” Now it’s time to renew, but the management company has given us a rent figure that we think is way over market. How can we convince management to get real? –Margaret M.

A: Unfortunately, your renewal clause has been written very poorly. As anyone with any real estate experience will tell you, “market rates” is a somewhat subjective term. And that could doom your renewal right.

When a contract (including a lease) provides for something to happen, but that act is not certain or clear (that is, a judge cannot easily order the parties to comply with it), the contract or that portion of it might be held unenforceable. If you end up in court trying to force the landlord to renew “at market rates,” a judge may refuse to issue the order simply because it’s not clear what “market rates” really are. (Incidentally, this is why, in many leases and other contracts, you’ll see a “savings” clause at the end, providing that if any portion of the contract is ruled unenforceable by a court, the balance of the contract will survive.)

But all may not be lost if you and the management company really want this renewal to happen. You need to agree on a procedure for coming up with a figure for market rent that you can both accept. This shouldn’t be too hard. You could each nominate another real estate professional (a broker who deals with rentals, or other management companies), and ask them to arrive at a figure. If they can’t agree, each of you could agree on a third professional who would break the tie.

You shouldn’t have to pay for this service; these professionals should offer their time and expertise in the spirit of helping their colleague (the management company responsible for the poorly drafted clause), and in hopes that you will remember them when and if you decide to become a homebuyer.

In the future, if you encounter another renewal clause, make sure that it contains a mechanism for arriving at “market rates.” You might use the method just described if the landlord and tenant cannot initially agree. And be sure to specify when the tenant must exercise this right to renew (it should be a month or more before the lease’s ending date, to enable the landlord to re-rent before the term ends, if the tenant decides to move). Finally, make sure the lease tells the tenant how to notify the landlord that he or she plans to renew (written notice is always best).

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at [email protected].

Copyright 2010 Janet Portman

See Janet Portman’s feature, Are Occupancy Limits Legal?

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  • [email protected]

    Do your homework and get copies of classified ads from local newspapers that offer rental sections in your area. Your local library should have them on microfilm or on computer. Find units in your neighborhood that are of the same general dwelling conditions as yours: size, number of rooms, same amenities, furnished or unfurnished as was yours.

    You entered into this contract with the landlord and that means that you have a duty under the same, so it’s not just on the landlord or his management firm to work this out alone. Do your duty and do some research. Also, look online at places like CraigsList and rental sites for rental units in your neighborhood.

    Site each of your sources: where advertised, when advertised, conditions of lease, websites, etc… This will establish your case in a clear and convincing manner. If you can find the stamina to do so, run some statistics on the units you’ve located: average rental cost overall, range and percentage differentials, chart the changes over time, map the location of the units, heck…power point it for the judge…lol. You’ll blow them all out of the water if it comes to a court case.

    Enlist your friends, family, colleagues, and loved ones to help. Make it a project and throw a party with the cash you save!

  • Abdul

    Janet makes a very good point for us all to remember. Lease agreements are not written for the landlord or the tenant, but for the judge in court that will have to rule on any particular matter. So when you write your lease clauses make sure that when the judge hears your case that he or she can immediately say what is and what isn’t. Do not be vague and ambiguous be about the details don’t say loud music say music that is above 100 decibels so it can be measured and quantified.

  • I am a broker who specializes in lease renewals. Absent specific terms in your lease for determination of what constitutes the new “market rent,” the burden will fall on the party who drafted the lease, usually the landlord. This means that the tenant need only show a reasonble basis for its determination of “market rent” for the apartment, such as an opinon of market value from a local broker who is familiar with the apartment and the market. Once you have this opinion, get it in writing. Send it to the landlord together with a certified letter informing the landlord that “$X.XX” is the new rent for the renewal term as per the terms of the lease, etc.

  • Bibi

    Can a landlord not renew a lease if he/she gives the 30 day notice? Do they have to give a reason?

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