by Janet Portman, Inman News
Q: I’ve taken over the management of my family’s small apartment building and recently spoke with someone who answered my ad for a vacant unit. After talking with other owners nearby, I realized that I had set the rent $200 below market. We haven’t signed a lease yet, and I’m wondering if I can correct my mistake. –Tim A.
A: It’s a delicate matter to increase the rent after the unit has been listed or advertised at a specific rate. Whether you can do so with minimal risk of legal trouble depends, first, on your reasons, and secondly, on the extent to which someone has relied on the first figure. At one end of the spectrum, a typo in a newspaper ad, particularly one that resulted in an obviously wrong rent, could be confidently corrected. At the other end of the scale, a landlord who upped the rent to discourage tenants of a certain race or religion would unquestionably be breaking the law. You’re somewhere in between, having made a bad business decision that you now want to rectify.
The riskiness of changing the rent also depends on how far along you are in the negotiation process and whether your prospect has substantially relied on the original rent, making decisions that will now hurt her if you increase the rent. For example, if your prospect could prove that the two of you were just about to sign the lease, that she didn’t rent other similarly priced units in reliance on your stated rent, and that these other units are no longer available, she might get a judge to order you to stick with your first figure.
Finally, even if you think you can confidently adjust the rent, be aware of the possibility that your prospect may interpret your action as discriminatory. If she is a member of a legally protected class, which includes (under federal law) race, religion, color, national origin, familial status, disability and sex, she could complain to a fair-housing agency or fair-housing watchdog group, alleging that increasing the rent was a thinly veiled act of discrimination. That’s the last thing you want, since even if you explain yourself and revert to the original rent immediately, the experience of being charged with a fair-housing complaint will be most unpleasant.
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@example.com.
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Copyright 2008 Janet Portman
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