Cannabis In Rentals: Where’s The Line? (Podcast #343)

Podcast Host, Andrew Schultz, chats about cannabis in rentals. Is there a line that you can draw despite it being legal in some states?

Also in this episode, Andrew discusses a story of tenants who overpaid for more than a year and never realized it.

Last, but not least, how do you handle tenants who want to make a repair to your property themselves vs. hiring out a contractor? Is it a good idea? Find out now in our latest podcast.

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Show Transcription:

Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode number 343. It’s our first episode of 2021. And I’m your host, Andrew Schultz. On today’s episode, we’re going to be talking about tenant-caused damage due to plumbing, modifications, tenants who overpay their rent on accident, and cannabis in rentals. Where do you draw the line? We’ll get to all that right after this.

Voice Over: (00:26)
Welcome to the Rent Prep for Landlords podcast. Now your host Andrew Schultz.

Andrew Schultz: (00:31)
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, chances are someone in the group has been there before and can lend a helping hand. As of this recording, we’re at over 11,800 members, and we need your help and the push to 12,000. Check it out today over at facebook.com/groups/rentprep. Don’t forget to mention the podcast when answering the question. So we know how you found us.

Voice Over: (01:00)
Water cooler wisdom, expert advice from real estate pros.

Andrew Schultz: (01:09)
This week’s water cooler wisdom comes to us via the landlording subreddit. This one deals with a plumbing issue as a result of a tenant modification. Let’s jump right in. I own a rental property in the swanky neighborhood of Federal Hill, which is currently rented out by three young professionals. I recently went to survey the damage from a leak in the third-floor bathroom that dripped down into the bulkhead in the bedroom below, I wound up having to rip out about 30 square foot of waterlog drywall. I found the leak was coming from the hot water line to the bathroom sink, particularly the shutoff valve and the PVC joint below. I also noticed that they had installed a day running from that little hot water line, a host snake out to the toilet. And I’m fairly certain that they damaged the pipe when installing the b-day fitting and thus caused the leak and the damage.

Andrew Schultz: (01:54)
But I can’t necessarily prove it. It could’ve just been a bad valve or a weak PVC joint that was on its last legs. Anyway, do any landlords ever have an issue like this? How do you handle it? I don’t want to accuse them of being responsible and say that they have to pay for all of the repairs, but on the flip side, there is a bit of damage to fix. So before we jump into the issue at hand, I do want to make a mention of the fact that PVC and CPVC are notorious for situations like this, where there’ll be some sort of a flex or a movement in the line, which will create some sort of a crack. Um, if you ever get a frozen temperature that impacts one of these pipes, it’s almost guaranteed that that pipe is going to split. They don’t have the flexibility that a PEX does or anything like that.

Andrew Schultz: (02:38)
Essentially it’s, it’s PVC pipe that is glued together. And when they glue that pipe together, it’s actually a chemical weld. It actually melts the plastic of both pipes and fuses them together. So it’s a, it’s a chemical bond that’s that’s occurring when you glue these pipes together, which again, leads to them being very, very inflexible. I know that there are actually some insurance companies that won’t insure a house that has PVC or CPVC water lines for this exact reason. It’s very, very common for these two over time, we’ll get brittle or could crack or something along those lines. Personally, every time I’ve seen a PVC or a CPVC setup, I’ve taken one look at it and thought to myself, I don’t understand how these people are dealing with this water situation. I’ve never seen one that looks like it was professionally installed. Um, I’ve never seen one that looks like it should even be operating properly. So, you know, I’m sure there are a lot of properties out there where PVC and CPVC are installed and do just fine. But I can tell you from my experience up here in a cold-weather climate, that’s certainly not the case.

Andrew Schultz: (03:40)
So moving past that, we do have a couple of issues at hand here. The first issue is you have tenants that made a modification to your unit without permission. The second issue is that modification has caused subsequent damage because of this. My initial recommendation is that this should be back billed to the tenant. They essentially made a modification without permission to the property. Uh, and as a result, you now have damage that you have to deal with. Uh, the tenant may be able to submit the cost of the repair to their renter’s insurance or something along those lines, um, to get some of the costs of the repair covered, or they may decide that they just want to pay for it out of pocket.

Andrew Schultz: (04:19)
But it sounds to me as though the, there was no leak prior to the tenant making the modification. Now the tenant has made a modification. And as a result of that modification, you have this leak. Um, I don’t think that if the tenant hadn’t made this modification, that you would have this problem. So I think that it’s pretty clear, at least from where I’m sitting, the tenant does have at least some culpability in this entire situation. You know, you may decide that you don’t think that the tenant is fully responsible. Um, I think the tenant is probably fully responsible in this situation, but again, like I had said just a few minutes ago, these PVC and CPVC water lines, you know, EV over time, they’re not flexible and they will crack or something like that if they’re mishandled. So there is something to consider there. Something else that’s worth noting is while you have an issue with these tenants and the work needs to be done, don’t delay the repair while you’re negotiating with a tenant, as far as who’s going to be taken care of what the most important thing is to remediate the issue.

Andrew Schultz: (05:12)
So fix the broken line and get the drywall repaired, which it sounds like you’re already doing, but just as a general note, don’t delay a repair to negotiate a situation like this with the tenant, just make sure you’re documenting everything along the way, get really good sets of photos or a video. If you’re able to. Um, if you’re bringing in an outside contractor to handle the plumbing work or the drywall work, have them document what they saw and what they did thoroughly so that you have that information when you’re negotiating with the tenants as well. But ultimately at the end of the day, this is one of those things that should definitely be back billed to the tenant. At least some portion of it, whatever portion you decide is fair is between you and the tenant. In my opinion, I think the tenant is mostly responsible for this issue and would be trying to push most of the cost of this repair back to the tenant.

Andrew Schultz: (05:58)
Because I don’t think that if they had made the modification with the body in the first place, you probably would not be in this scenario. My best guess here is that an untrained tenant made this modification and caused a crack in the line as a result because they weren’t sure what they were doing. And didn’t have any experience dealing with these pipes that, you know, obviously as we’ve discussed, have their pros and cons. So that’s where I would be on this. This is definitely something where the tenant has some culpability and should be back billed for it. And whether or not they choose to pursue a renter’s insurance claim, that’s on them. But ultimately this is something that there is some tenant responsibility for. And that tenant has to acknowledge that fact.

Voice Over: (06:39)
Feet on the street, real stories from real property managers.

Andrew Schultz: (06:47)
This week and feet on the street. We’re talking about tenants who pay over the amount of rent that they’re supposed to pay. And also tenants who pay in weird increments. Let’s jump right in. This one comes to us from the landlording subreddit. I have an apartment with some very artsy tenants who once filmed an entire professional music video in the backyard of my building over the course of two days, there was a little noise to deal with, but the neighbors were more intrigued than anything else. Those same tenants also pay rent in very strange increments. The rent is an exact multiple of a hundred, but the cozy payments I get from each roommate as I let them pay separately would always be something like $436 and 25 cents. They never seemed to check with what everyone else had already paid or how much rent had been credited to the following month.

Andrew Schultz: (07:30)
So they actually collectively overpaid me for more than a year until around the time that they got a subletter who I assume straighten them out and also figured out how much each one should actually be paying. It was a funny story to tell, especially during COVID, because folks would ask me whether I was still doing okay with my tenants. And I would say, well, actually they’re overpaying me. So we actually got a couple of tenants that are overpaying as well. We have one tenant who she knows that her income is a little bit more sporadic. So she chooses to make sure that she always has a month of rent paid in advance, which is fine by us. It’s it works out pretty well. The one thing I will mention is that in some States you are limited as to how much you can hold an advanced rent and things of that nature.

Andrew Schultz: (08:12)
So be sure that you are checking into your state laws on something like that, to make sure that you are remaining compliant. Um, moving on from that, we actually also had, I had a weird tenant story that I want to do include here because it’s a little bit similar to this, but not, not quite the same. We actually had some college-age tenants that were w it was the kind of the same thing. We were always seeing weird deposit amounts when they would make their rent payments. And one of us actually had asked them, why are your rent payments always so weird and in such odd amounts? Well, it turns out that they had actually turned the rent into a drinking game, as well as a gambling game during football. So I don’t know all the specifics of how it worked out, but in some capacity, they had come up with sort of an internal game amongst themselves, um, basically to determine who had to pay how much rent in any given month.

Andrew Schultz: (09:02)
And they would literally sit and for instance, on a football game, they would bet the outcome on a football game. And whoever won that bet owed more rent than the other person. So I guess that was kind of their unique way of determining who owed what for rent. The rent was always paid. The rent was always paid on time and it made them happy. So as far as we were concerned, they were free to continue to do whatever it was that they wanted to do. Something else that I’ve seen landlords offer is either a twice a month rent payment. So you have a payment that’s due on the first of the month and the payment that’s due on the 15th of the month, that sometimes will help sentence that are struggling a little bit to make sure that they’re keeping their keeping their obligations current.

Andrew Schultz: (09:40)
That might be an option for a tenant that you have that is struggling right now. Um, it might be a situation where, okay, if you’re on a two-week pay cycle, it may be easier for you to make that payment once on the first. And then once on the 15th, just split that payment in half something else that I’ve seen housing providers do in the past. And I guess this one is a situation that you have to decide if you’re comfortable with it, or if it’s even allowed in your state. I have seen some landlords say that you owe the same amount every two weeks regardless. So instead of doing a first and the 15th where you would be making a complete rent payment, they’re gonna say, okay, well, you’re going to owe us every two weeks regardless. So you may have a thousand dollars a month rent.

Andrew Schultz: (10:20)
And that half of that rent, that 500 is due every two weeks, not on the first and not on the 15th. So what you’re essentially doing there is you’re collecting $500 in rent, and you’re getting 26 payments over the course of the year, as opposed to 24 payments. If you were splitting up the month into equal parts, you know, 12 payments at the first of the month, 12 payments at the 15th of the month, you would actually wind up with two additional payments here. So again, going back to that thousand dollars a month rent, if you’re at 26 payments, you’re going to be making 13,000 over course of the year versus the 12,000. If you are just handling it on the first and the 15th, essentially, you’re getting an extra month of rent there for giving the tenant the ability to break their payment up once every two weeks, as opposed to a lump sum due on the first.

Andrew Schultz: (11:10)
So right wrong or indifferent, I guess that is another method that you can use for collecting rent. It might be something that’s worth considering if you’re in a state where you can do that, it might also be something worth considering if you’re in a situation where your tenant does need to make those bi-weekly payments just to stay caught up. So how do you guys handle your rent collection? Do you allow tenants to make multiple payments in the course of a month, or do you require the full rent payment to be due on the first, every single month? Feel free to let us know. You can shoot us a comment either in the Facebook group, or you could head over to own buffalo.com and fill out the contact form. Let us know how you guys handle your rent payments,

Voice Over: (11:49)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.

Andrew Schultz: (11:58)
No matter how you slice it. The use of tobacco and marijuana inside of a multifamily property is always going to be an issue. Um, this week in our forum quorum, we actually have a housing provider out of Virginia. Who’s having some issues with her tenants and an HOA let’s jump right in. Hello. My tenants have complained to the HOA about the neighbors smoking marijuana, but nothing is being done there Lisa’s ending next month. And they do not want to renew because the smell fills the unit. I’ve talked to the HOA as well. And they said they will look into it, but their office is closed due to COVID. I don’t think that they’re going to be doing anything. What else can I do? Should I tell potential new tenants about the neighbors upstairs? It may or may not be a deal-breaker once they move in and smell the cannabis, please advise.

Andrew Schultz: (12:41)
Thank you. And again, this is a property that’s located in Virginia just for reference. So I went ahead and took a quick look and found that medical marijuana is legal in the state of Virginia. Actually, in July of this year, there was actually some expansion of the medical marijuana laws as well. So what I’m trying to convey here is that you may be in a situation where if the person is a valid holder of a medical marijuana card license, whatever you want to call it, there may be very little that the actual homeowners association is able to do. Uh, I would say that this would probably have to boil back down to what are the laws for the condo association? What are the rules for the condo association say with regards to smoking indoors, um, and then what can be done to essentially prevent these tenants or prevent these other occupants?

Andrew Schultz: (13:31)
I’m not sure if they’re tenants or if they own their unit, what could be done to prevent them from smoking in their unit. So that’s something that you’re going to have to look into your HOA rules and regs on to see what you can find out when you’re communicating with the HOA. I would recommend, it sounds like you may have been communicating verbally before. I would recommend switching over to communicating and writing either in written letter or via email, because I think that at least that way you’ll have a written record that you’re reporting this issue and that it is a concern in the building, uh, essentially for lack of a better term, putting them on notice that there is an issue, um, and then asking them directly, what is being done to resolve the issue if it’s if it’s not being addressed in a timely manner.

Andrew Schultz: (14:10)
I think that there has to be a discussion with the HOA there to see what is their intention if they’re planning on doing anything or not. Um, and don’t forget, you could always attend an HOA meeting. If you have to elevate things to that level, to kind of get some clarity as to what is going to be done. If anything, as for potential new tenants, this could be one of those things that could have an impact on their quiet enjoyment, covenant, which essentially is a promise that guarantees that the tenant will be able to use the apartment in peace. And they’re not going to be disturbed by other tenants, hostile claimants, things of that nature. So this may be a situation where having a nuisance in the buildings, such as the smoking smell from marijuana could be a violation of that tenants, quiet enjoyment of the unit.

Andrew Schultz: (14:56)
So that’s something you’re probably going to want to have a conversation with an attorney who’s familiar with the Virginia landlord-tenant laws, have a conversation with an attorney and see what their recommendation is for a situation like that, whether or not you would be required to disclose such a thing that pretty much wraps things up for this week’s episode of the rent prep for landlords podcast. Thank you all so much for listening. We really do appreciate it. Our goal with the podcast is to help as many people as possible and make educated decisions. When it comes to real estate, 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, please 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 what’s drew up to.com from there, you’ll find links to everything going on with me over at, on Buffalo, as well as other projects we’re working on currently, there’s also a contact form over at ownedbuffalo.com, where you can send me a message directly.

Andrew Schultz: (15:51)
If you’re looking for top tier tenant screening services, head on over to rentprep.com, there are multiple products to choose from including tenant paid options. If you’re over 50 doors, ask about the enterprise-level programs and pricing. We’ve been enterprise users of Rent Prep for years now, and it’s definitely changed the way that we screen our tenants. Check that out today, over at rentprep.com. Again, thank you all so much for listening. We’ll be back next Thursday with an all-new episode that you won’t want to miss until then. I’m Andrew Schultz with ownedbufallo.com for rentprep.com. And we’ll talk to you next week.