Podcast 354: What are Tenants' Rights in Rental Construction?

Podcast Host, Andrew Schultz, goes over best practices for landlords that are renovating occupied rental properties, including a tenant’s rights during the renovation process.

Next, property keys. Can your tenant change the locks without permission? Often times, this type of permission, if any, is written into the lease agreement.

Last, but not least, the impact of COVID-19 on the real estate industry has been immense. Here’s what to do if you’re approached by tenants who want to stay in your property, despite you not wanting to renewing their lease.

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Show Transcription:

Andrew Schultz: (00:00)
Hey everybody. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode number 354, and I’m your host, Andrew Schultz. On today’s episode, we’re going to be talking about rental keys. Who’s responsible tenant or landlord, property renovations, and how to keep your tenants happy and having sympathy for tenants. Where do you draw the line? We’ll get to all that right after this.

Voice Over: (00:24)
Welcome to the Rent Prep for Landlords podcast. Now your host Andrew Schultz.

Andrew Schultz: (00:28)
Before we jump into today’s episode, don’t forget to check out the Rent Prep for Landlords Facebook group. It’s a great free resource for you to network with housing providers from around the country. And if you have a question or a situation that you’ve never dealt with before with over 12,200 members, chances are someone in the group has been there before and can lend a helping hand if you haven’t checked it out yet, do it today. Over at facebook.com/groups/rentprep. Don’t forget to mention the podcast when answering the questions. So we know how you found us

Voice Over: (01:01)
Forum, quorum, where we scour the internet for ridiculous posts from landlords and tenants.

Andrew Schultz: (01:09)
We’re going to start this week with our forum quorum. This one comes to us from the Rent Prep for Landlords Facebook group. And we’re going to go ahead and jump right in here. Three weeks after the lease is up the tenants say they have vacated I’m at the property. And aside from obvious exterior neglect, my keys don’t work. I texted the tenant that I need a copy of the keys and I’ve received no response is that the landlord’s responsibility to have a second set. If the tenants claim that they didn’t change the locks, can I charge them for a locksmith to open up and change the locks all the way around the house? And again, this one comes to us via the Rent Prep for Landlords Facebook group. So the first thing I’m going to say here, like a broken record is check your state laws.

Andrew Schultz: (01:47)
If the tenants have confirmed that they vacated, then I would say, the place is yours to enter as you please, hopefully, you have that in writing somewhere, even as a text message so that it can be saved if there’s any issues that ever arise. But check your state laws first and foremost, to make sure that you have the right of entry. So as a landlord, you do have a lot of responsibilities. And one of your responsibilities is to ensure that you have access to the building at all times. And a landlord should always have a spare set of keys for their building and make sure that the keys that they have for their building actually work. You know, you will get tenants that’ll change locks from time to time or things like that or a tenant that doesn’t return keys. You know, suddenly you throw a new key under that same key chain and you have seven keys for one door that goes into an apartment, and you’re not sure which one actually belongs to that apartment anymore.

Andrew Schultz: (02:33)
It’s always a good idea to have a good key management system in place for a situation such as this, or really, you know, it doesn’t matter the size of the building. You should have something in place to organize your keys so that you know that you have access to the building in a situation like this, or if there’s an emergency, you know, I don’t know what the situation is with this house, the number of units, but let’s say you have an upper or lower duplex, like what we get typically see here in Buffalo, if the upstairs tenants not home, for instance, and there’s something flooding from their bathroom into the downstairs, you’re going to need access to that upstairs apartment right away to find out, okay, what’s flooding and how do we get it shut off. So you should always make sure that you have a spare set of keys to the building, no matter what.

Andrew Schultz: (03:13)
So if a tenant doesn’t return a set of keys, which happens pretty frequently at the end of a tenancy, you can charge them whatever it costs you to gain entry into the building. You should be changing the locks on every tenancy anyways. So I don’t know if I would necessarily charge that back to the tenant, the actual locks themselves. But if you have to hire a locksmith to get you into the building, because the tenant does not return the keys to you, I would think that that is something that you could charge against their security deposit. You might want to try to charge the change of locks, but honestly, that would be something that I would consider a normal wear and tear item not even necessarily wear and tear, but a normal turnover item to change the locks out. So I would probably not charge for the locks themselves, but I would charged for whatever it costs me to gain entry back into that building.

Andrew Schultz: (03:56)
So what do you do if you can’t confirm that the tenant is actually out of the building and you, maybe they didn’t send you a text message or an email or something like that, or you had a verbal conversation that you have no backup to or whatever the case may be? Maybe you just can’t confirm that the tenants actually gone. So you do have a few options here as to things that you can check to see if the tenant may have vacated first and foremost, maybe just talk to a neighbor and ask them if there have been any moving vehicles or if they’ve noticed anybody moving in or out of the building you know, they may have replaced themselves with somebody else. They may have seen somebody move in and somebody move out. You know, a neighbor might be able to tell you some more information than than what you already have in that way.

Andrew Schultz: (04:34)
The other thing that you could do would be called the utility companies to check and see if the utilities are on or off. And generally speaking, the utility company will tell you when it was turned off, but they may not be able to tell you, you know, the previous person who was on an account or whatever the case may be, but the utility company may be able to tell you whether the utilities are on an active gas, electric, and water for that property that might actually lead you down a path of whether the not the tenant is actually still in place in the home. The other thing you can do is try to see if the tenant still has belongings inside the home by peeking through a window. If it’s a first-floor apartment or something like that, you may have some luck looking to see if there’s still things in the apartment.

Andrew Schultz: (05:11)
If it’s a second floor, I’m not going to recommend that you throw a ladder on the side of the building or something like that. That might be a little bit too much, but that’s another option that you can consider when you’re trying to figure out whether or not a tenant still is in possession of the unit, as far as what to do when you have determined that that tenant is no longer in possession of the unit, you know, depending on your state, you may need to make sure that there’s not some sort of a, like an abandoned apartment process that you have to go through posting notices and waiting for a tenant to respond. And if they don’t respond, then you can just reclaim possession of the apartment. That’s the thing in some states, in other states, you have to go through that full eviction process to know for sure, 100% sure that that unit is back in your possession.

Andrew Schultz: (05:52)
I don’t think that that’s probably going to be the set of circumstances that you find yourself in here. It sounds to me like you already have some sort of proof from that tenant that they have moved out. So at this point, it’s more of just an access issue, getting into that building to make sure that the apartment can be turned over and made ready for the next tenant. So a couple of other things here that I’ll mention just at the end, make sure that your lease does have a clause that says no lock changes as well as no adding or no removing locks will get tenants from time to time that will put like a chain lock or something stupid on their front door. And any time we see those, we immediately pull them off. We don’t want extra locks added to a door because it prevents us from accessing the place in the event that there is an emergency or could prevent us from accessing the place, which is really what we’re trying to avoid.

Andrew Schultz: (06:36)
We also tell people not to remove locks. This is an instance we’ve had in a couple of places where tenants need exterior basement access. So we provide them with a key box and inside the key box will be a lock. I’m sorry, a key that will open a padlock so they can get into the basement through the the bill code doors. We’ll have tenants that just take the lock off, whether they’re taking it and using it somewhere else, or it gets lost or whatever the case may be. That’s what we mean when we say no removing locks, you want the building to be as secure as it can be. Given whatever, you know, set of circumstances you have for access. You don’t want tenants changing locks, adding locks or removing locks, because what that’s doing is limiting your access to the building, which ultimately is what you don’t want to happen.

Andrew Schultz: (07:18)
You should also make sure that you have some sort of a charge for lockouts in your lease. So that intimate tenant does call you at three o’clock in the afternoon or seven o’clock on a Sunday or whatever the case may be. You have a charge built into your lease to go and physically let them back into their unit. Or you can refer them over to a locksmith. Typically, the way that we’ve done it is our fee is less than what a locksmiths would be. So it encourages the tenant to call us number one, we have a key, so we’re not going to cause damage. And a number two, we’re going to be cheaper to that tenant than what the locksmith is going to be. So that’s, you know, an extra, an extra revenue source for us, not a big one. We only have to do a few lockouts a year, but it’s nice to know that we have something in our lease for that type of situation. When we do get those random call-outs late at night or something along those lines,

Voice Over: (08:04)
Water cooler wisdom, expert advice from real estate pros.

Andrew Schultz: (08:13)
This week, we have two water cooler wisdoms for you, one from the Rent Prep group, and then another one from Reddit. We’re gonna go ahead and start with a Rent Prep from Landlords Facebook group question. This one is kind of a unique situation with a few ins and outs on it. Let’s go ahead and jump in here. My husband and I bought a quad in October 2019. It was fully occupied. It’s near five different colleges. So most of the tenants that we have had have been students or teachers when two units became vacant, we decided to do a complete renovation of both. It’s taken about four months. I went to show the beautiful newly renovated apartment to a prospective tenant today. And one of our current tenants yelled out loudly about how she could smell and hear the noise of the construction over the last four months.

Andrew Schultz: (08:54)
She and her roommate are not renewing their lease. We planned to remodel two other vacant apartments in the future. What can we do to make this a better experience for our tenants, our current tenants, as well as our new tenants. So I’m going to start this off by saying that I think that this starts primarily as a communication issue. I’m curious as to whether or not you spoke to the tenants in the building prior to beginning this renovation work, to let them know how long it was going to take, and you let them know that there are going to hear a sound in things of that nature. Giving them kind of a timeframe, not only of the entire project, but when they can expect to hear and see people on site doing work. I think that this is probably first and foremost going to start as a communication issue.

Andrew Schultz: (09:34)
So I would start by saying that do the work during normal business hours during the day with no late nights or early mornings. And I say that because tenants have lives too, and most people operate a daytime schedule. You’re always going to have the occasional night worker or someone like that that operates on a completely different schedule than what most of us do. That’s a challenge in and of itself. We’ve talked about that stuff in the past. But for the most part, a lot of these things can be remedied just by working during normal hours, not working, you know, early mornings or late nights where it would be a disturbance to the tenants, normal daily routine. If you will, as far as things that you can do during the construction, my recommendation would be add in some sort of insulation or noise blocking to prevent noise transfer between units.

Andrew Schultz: (10:22)
This is going to be a worthwhile upgrade, not just during the construction, but even after just to eliminate the amount of noise that transfers from one unit to another, when tenants are living next door to each other, that’s always a concern in multifamily. Is am I going to hear my neighbors arguing or in the bedroom or whatever the case may be. So if you’re at that point where you’re doing full rehabs, maybe it’s time to think about doing some insulation or noise blocking between units to kind of make things a little bit nicer for the incoming tenants that might be coming in down the road. Construction is loud. Tenants are going to hear noise. That’s part of living in a multifamily property. You know, realistically speaking, they’re going to be inconveniences to living in apartment or really anywhere from time to time. We’ve used the example before I think here on the podcast that road construction doesn’t stop in front of your house, just because it’s inconvenient to you.

Andrew Schultz: (11:11)
It’s part of one of those inconveniences of just living in a society. And sometimes things happen that have to happen but might be inconvenient. And it sucks if it’s happening to you, but more often than not, it’s something that’s necessary to happen. So that’s kind of my thought process on the, what can you do during the, and again, you know, I’m going to back up the construction thing. If this is something that extends well past, just construction work, having people, you know, people, having people over other tenants, having guests over people, using common areas, even if they’re just hauling in groceries or having a conversation or something like that. You know, even neighbors who live on either side of you and other buildings, you may not even have any control over those people, but they may make your life less pleasant simply because they’re allowed or something like that.

Andrew Schultz: (11:59)
This is one of those things where there are just some inconveniences in life that can’t be avoided, at least in my opinion. So the one thing I did want to mention is what are they smelling as part of the construction process? If there’s going to be, if they’re smelling something during the construction process, you may be in a situation where there’s going to be smell trends for, from one unit to another during tenancy. This is a big issue. If you have somebody that smokes in their apartment, or if you have somebody that cooks with a lot of heavy spices or something along those lines where you’ll get smell transfer from one unit to another, and it can be really, really gross. Like I know that we had a unit that we found out the downstairs tenant was smoking in one of the bedrooms downstairs, but you could smell it upstairs in the kitchen because his bedroom was basically right underneath of where the kitchen was in the second-floor unit.

Andrew Schultz: (12:49)
So they created an issue. We had to figure out how the smell was getting out of one room and up into another room and try to seal it as best we could. It’s one of those things that you may have to spend some time chasing it, but going back to the story circumstances with your tenant here, if they’re smelling chemicals during this construction work, they’re probably going to smell cooking smells. They’re probably going to well smoke. If somebody is smoking in another department, you’re probably going to need to go ahead and find and close up any sorts of gaps or things like that, that prevent smell transfer from happening from one unit to another. That really is something that should try to be limited as much as possible. I understand there’s a lot of old housing stock out there that you’re never, ever, ever going to be able to seal completely to prevent smells from going from one unit into another or something like, even if you have like a common forced air furnace system that spread against multiple apartments, again, same situation, it’s going to be pulling that return error and then pushing it into another apartment.

Andrew Schultz: (13:43)
And if you have say cooking fish in your apartment, well guess what if somebody else has ductwork connected to that same system, they’re going to have fish smell in their apartment too. So that is something to definitely keep in mind. When it talking about the the smell of transfer from one unit to another, I think the biggest concern I have with this is the tenants yelling at you while you’re out showing the apartment to another prospective tenant. I would approach these tenants and ask them to be a little bit more professional about coming to you with concerns. They don’t need to yell at you while you’re showing the place to another prospect. And honestly, if a tenant yelled at me while I was showing an apartment to a prospect, I would probably be having a conversation with them more along the lines of how that’s completely unacceptable.

Andrew Schultz: (14:25)
And please don’t do that again. Come to me before the showing, come to me after the showing, call me anytime, but do not stand there and start screaming at me while I’m out showing an apartment to a prospective tenant. If I was a betting man, I would say that that was probably more on purpose than not, which is again, another concern. Like why are these tenants suddenly, suddenly the whole demeanor of the tenant has changed by the sounds of things ever since this contracting work has gone on and, you know, tying everything up, putting it all into a nice meat package. I’m going to go ahead and remind you that this properly started as a communications issue. If this was a situation that was communicated to the tenants early on, I think that there probably would have been a lot less headaches going down the road and getting this project wrapped up.

Andrew Schultz: (15:08)
Good luck to you. Hopefully, you find a way to handle the existing tenants. Hopefully you’ll find a new tenant for the unit that you’ve been renovating and good luck on your future renovations. Our second water cooler wisdom this week comes to us via the landlording sub-Reddit. This is an interesting one. This is a situation where a landlord’s kind of painted into a corner and needs a little bit of help. We’re in the process of getting tenants out of a unit that we intend to occupy. We verbally told them on April 1st that we were not renewing their lease after may and legally serve them the notice to quit that gave them until May 31st to vacate. Before we could bring an eviction proceeding. They’ve been generally communicative as we ask for updates. And originally we’re being very picky when trying to find a new apartment, but are now telling us that the competition for apartments right now means that they can’t even get landlords to call them back.

Andrew Schultz: (15:56)
I believe them that it is rough right now, and we want to be understanding, but we also need to move into the unit. What would you do? How much sympathy in slack would you extend it before serving eviction papers? And again, this one comes via the landlording sub brought up. So again, broken record style, first and foremost, check your state laws, make sure that you’re serving the notices the way that they need to be served to accomplish what you’re attempting to accomplish. It sounds like you’ve done all that. I’m going to go ahead and assume that all of the notices were delivered correctly and we have no issues there. So you gave these tenants essentially 60 days notice to relocate, and that should be more than sufficient time to find an apartment. If there’s enough effort being put forth. If you were just turning it over for another tenant, maybe I could see some leniency, but even then still, probably not because you’ve given them, at least in my opinion, sufficient notice that it’s time to find another place regardless.

Andrew Schultz: (16:47)
You need the place for you personally. And because of that, I would definitely not be offering a whole lot of leniency or slack sympathy, anything along those lines, there may be issues preventing these tenants from finding a new apartment, such as a credit issue or a background issue that you’re not even aware of, or they may not be able to find something in their budget because rents have been increasing. And yes, there is a little bit of a shortage of rentals in the market. I don’t think that that’s a shock to anybody rents have gone up. There’s less units on the market, so there’s more competition. So there may be a situation where they are having trouble finding a unit, but they may just need to change what their standards are in order to find that unit that works for them. Essentially, you know, as I was thinking this through, I kind of started to wonder, is this apartment at market rate?

Andrew Schultz: (17:33)
And if the apartment’s not at market rate, is that part of the reason that they are really trying to pump the brakes when it comes to finding a new place if they’re paying $300, $500, less than market value for the place that they’re in right now, that would be a pretty substantial for them to try to, you know, not move. If it’s going to cost them significantly more to find another place and go somewhere else. So that’s something else that might be an area of concern. And this is one of the reasons that we, that we always preach keeping your rents as close to market rate runs as you possibly can, as long as you’re providing a market rate product. So going back a little bit here, as far as any sort of sympathy or slack, I don’t have any here. Unfortunately for the tenant, you did what you need to do by law.

Andrew Schultz: (18:18)
You gave them a verbal notice and then you followed it up with a correct written notice. And that notice expires at the end of May. I would tell the tenant that if they’re still in place on June one, that you have to file the eviction. If your state still allows for eviction checks, you might want to remind the tenant that them finding a place once an eviction has been filed on them is going to be even harder. And no one wants to go that route. I can tell just by the way that the question is worded, this is not the route that you want to go, but I think that you need to play some hardball here if you want to get access to that unit. So moving forward, if you’re able to file that eviction, file it as soon as you can on June 1st, not sure what area you’re in or how backed up the courts are, or if evictions are even being heard.

Andrew Schultz: (18:59)
But all of those things would be one more reason to file as soon as you can. If you intend to occupy, there may be some special carve-outs in any sort of an eviction moratorium in your area, again, check your state and local laws. But as far as that goes, even if you can’t evict, you do need to come to terms with the fact that you may have these tenants in place for longer than you intended with limited recourse. And that’s something you’re probably going to want to discuss with your attorney to see what sorts of options might be available to you. They may recommend that you go with a cash for keys or something like that, just to get them out of the unit so that you can occupy the home, whatever the case may be. You know, that’s something that you might want to speak to your attorney about just to determine what your next steps would be in the event that these tenants don’t move out on June 1st if you’re not in a position where you’re able to file an eviction, if you’re able to file an eviction, I would move forward with that and let the chips fall where they may.

Andrew Schultz: (19:52)
Unfortunately, it’s one of those situations where you don’t really have a lot of leniency here because you need the unit for yourself. So unfortunately for the tenant is probably not going to go the way that they’re hoping they probably are going to wind up being forced out of the unit. Eventually, it’s just a matter of how long that process will take and how aggressive you need to get in terms of court system and things like that to make it happen.

Andrew Schultz: (20:17)
If you’re bringing on new tenants and you’re looking for the best practices on how to verify rental history, you’re going to love Rent Preps’, latest guide on rental verification, check it out over at rentprep.com slash blog. Today, before we wrap up for today, if you’re a landlord or a tenant in the state of New York, and you’re looking for info on the New York state rent relief program, we just published a video on the Own Buffalo YouTube page. As of when this episode goes live, that program will have been just opened up at the beginning of June. You can find that episode by searching for Owned Buffalo on YouTube or head over to whatsdrewupto.com and there’ll be a link to that video, right at the top of our page. There pretty much wraps things up for this week’s episode of the Rent Prep for Landlords podcast. Thank you all so much for listening.

Andrew Schultz: (21:00)
We really do appreciate it. Our goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate. And you can help us to reach that goal. If you heard anything in this week’s episode or any other episode that will help someone, you know, do us a favor and share it with them. If you’re looking to get in contact with me, I can be reached over at whatsdrewupto.com from there, you’ll find links to everything going on with me over at Own Buffalo, as well as other projects that we’re working on as well. In addition to the Rent Prep for Landlords podcast, I also host a weekly show called ask a property manager. You’ll find a link on my YouTube page over at whatsdrueupto.com. And from there you can find access to the growing catalog of 60 plus episodes.

Andrew Schultz: (21:42)
Take a look and don’t forget to subscribe. If you’re looking for top-tier tenant screening services, head on over to rentprep.com, there are multiple products to choose from including a tenant-paid option. If you’re over 50 doors, ask about enterprise-level programs and pricing. I’ve been an enterprise user of Rent Prep for years now, and it’s definitely changed the way that we screen our tenants. Check that out today, over rentprep.com. Again, thank you all so much for listening. We’ll be back in a couple of weeks with an all-new episode that you won’t want to miss until then. I’m Andrew Schultz with ownedbuffalo.com for rentprep.com. And we’ll talk to you soon.