Lessons from a Small Landlord is a new bi-weekly column penned by a real-life NYC landlord whose pseudonym is Craig Roche.
In an ideal world without lawyers, apartment leases would be very short: “Tenant promises to pay $X per month for the use of the apartment, and landlord and tenant promise to behave reasonably.”
Plenty of tenants rent apartments or shares this way, but usually they know each other first. In the real world, for everyone else, lawyers write 10 pages attempting to codify what "reasonable" means.
From my perspective as a small landlord, an ideal lease:
- Is very official looking, making it look non-negotiable.
- Is printed in a microscopic font and full of impossible-to-decipher jargon.
- Gives the benefit of the doubt to the landlord in all circumstances.
- Has been tested in court.
The basic market-rate lease sets out the rent, the term of the lease, and what happens if things go wrong. Rent-stabilized leases in NYC last forever and are therefore quite long as they have to include every eventuality, no matter how unlikely. (For instance, even if you die, your estate still has to pay rent until the end of the term.)
Here in NYC, landlords typically start with a fifth-generation photocopy of one of two pre-written leases, and add modifications called riders.
The less common lease, published by the Real Estate Board of NY, is actually much fairer to tenants than the far more common Blumberg Lease.
Important: Not all landlords know that both leases have been modified over the years, so large sections of your lease may be totally unenforceable--especially provisions that say that the tenant will pay all legal costs.
The majority of this preprinted lease form, however, is not at all negotiable. A tenant who even tries will ring alarm bells in the landlord’s mind and is not going to get the apartment-- there’s nothing worse than a wise-ass tenant.
Many tenants despair about how unfair these leases are. In practice, however, no small landlord is going to sue a tenant over minor issues. Suing your tenants is really expensive. And small claims court is unlikely, too. Most buildings are owned as LLCs (though mine aren’t) and LLCs can’t use small claims court. Also, you can’t sue to get rid of a tenant there, so I don’t know any landlords who use it.
Instead, the landlord’s main ways to get you to comply with the lease are to raise your rent, not renew your lease, report you to a credit agency, or to provide really bad future references (which is why smart landlords will talk to a tenant’s previous two or three landlords).
There’s also a secret landlord blacklist that can make it pretty difficult for you to rent a new apartment in NYC, so skipping out on your last months’ rent can haunt you for years.
(Note: the blacklist used to be a list of everyone who has ever been summoned to housing court, but the state legislature changed it so it is now everyone who has appeared in housing court. SInce two-thirds of cases get dropped before that happens, it's less helpful to landlords and not used as much).
All this said, small landlords are more flexible than larger ones, and will often try to accommodate a good tenant. In my building, I've occasionally added these riders :
- Lease terms: Ideally, I want all of my leases to expire in the summer, when tenants are plentiful and prices highest, but if a tenant is going to graduate school next year, I’ll adjust the term of the lease to work with him/her.
- Renewals: I start tenants off on one-year leases. If I really like them, I’ll consider offering them two-year renewals, or a one year renewal option at a fixed price.
- Pets: I own a small mutlifamily building with rental units. It's also where I live. I don’t want my house smelling like cat pee, or to be woken up by barking, so I have a blanket no-pets clause in my lease. I’ll make the occasional exemption for a small fish tank, a bird, or a turtle.
- Security deposits: I generally charge first month, last month, and one month’s security deposit. If you offer another month or two in escrow, I'll reduce the income requirements to 30x the monthly rent rather than the usual 40x.
- Storage: If you ask nicely and your stuff isn't too heavy, I'll store it in the basement for you.
- Carpeting: My leases require 80% of the floor area to be carpeted, but at my discretion. If you walk quietly, don’t wear shoes inside, and the other tenants don’t complain, I’ll reduce or ignore this requirement.
- Breaking your lease: If you have to break the lease, it will cost me some money to repaint it and to find a new tenant. I’d prefer to charge you a lease breakage fee of one month's rent than have you sublet to a bunch of people I don’t know.
A fully executed lease in NYC can stretch to 30 pages, but a lot of these are government-required forms, including:
- Window guard forms
- Smoke detector affidavits--every apartment needs at least one. The tenant is generally responsible for changing the batteries, but I tend to buy them in bulk and include them.
- Carbon monoxide affidavit
- Lead paint disclosure
- Recycling rules--I’ve got better things to do than inspect tenant trash. If my building gets a ticket due to your negligence, I’ll try to stick it to the offending tenant.
- Bed bug disclosure
- Rent-stabilization exemption--tells you that your apartment is no longer subject to rent regulation.
- Next-of-kin form: In the unlikely event that you die, I’d like to know who to contact.
- W9 Form: To pay you interest on your security deposit, the bank needs to know your social security number. Small landlords don’t have to pay interest on security deposits.
- House rules: I don’t allow high heels or waterbeds, and ask the tenants to warn me before they have parties.
There are a lot of forms at a lease signing, but the odds that any of the non-vanilla items actually affect you are very small. Read it over before you sign, but in most cases, recognize that your lease is a take-it or leave-it offer.