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Wednesday
Sep212011

The Accidental DC Landlord

There are five major types of “accidental” landlords in DC.  Given that it can be almost impossible to escape being a DC landlord, it is best to only become one after weighing the risks and benefits, making sure you have a lease that protects your interests, and selecting your tenants carefully. 

1)   Sub-Leasing

Sub-leasing takes place in a few ways.  The tenant needs to make extra money so they take in a roommate, the tenant needs to move so they sub-lease the apartment rather than pay penalties for breaking the lease early, or the original tenant was never intending to live in the unit and rented it on behalf of their relative but they continue to pay the rent to the landlord.  The original tenant can potentially get into trouble with the landlord if their lease forbids sub-leasing, and they are responsible to the subtenant for maintaining the property according to the Housing Code and potentially for enforcing the lease against the sub-tenants on behalf of their landlord.  It is better for all involved to try to be honest with the landlord and break your lease if you must before you take on the responsibility of being a landlord.     

2)   New Owners

More and more new owners of investment residential property are failing to get clear title because there are existing tenants.  Buyers assume that as in most states they can evict those tenants without to much trouble.  That is not the case in DC.  Any buyer considering purchasing a property with tenants should have the assistance of an experienced landlord’s attorney as well as the normal real estate counsel to determine what they are getting themselves into. 

3)   Family & Friends

The saddest cases in landlord & tenant court are often patents or grandparents trying to evict their able-bodied adult children who refuse to leave.  Having seen many if these cases I must suggest that if you are going to accept rent from family, you should have a strong lease and house rules that govern the behavior of the adult children. 

4)   Banks

Like new owners, banks are foreclosing on property in DC and finding it occupied with tenants or squatters.  Just determining the difference can require expensive litigation.  Banks usually make horrible landlords, they have no real mechanism for property management and they are unprepared for the long-term problems of collecting rent, responding to tenant problems, and making repairs.  Some banks are trying to resell these properties to unsuspecting new owners.  See above.          

5)   Receiverships

A receivership takes place when the government or more often a public utility company files for a past due balance from a landlord.  Tenants can also file receiverships, but those are less common.  The receiver has the right to collect rent until the debt is satisfied.  In many cases where rent isn’t being paid and receiver has to sue for unpaid rent (with the landlord) the landlord often doesn’t want to participate or even can’t be found.  Courts have then often help receivers responsible for doing repairs in buildings they have taken over, a complex and costly procedure, and one not contemplated by the receivership statute. 

Whatever the situation, becoming a DC landlord should be a choice.  The responsibilities are serious and not easily escaped, so be prepared. 

 

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