Another new year…another New Year’s Resolution. “I resolve to go to the gym this year… I resolve to eat more Kale this year… I resolve to be more Zen.” Yet we all know that New Year’s resolutions rarely last more than a few weeks. Just ask those of us who bought Nordic Track machines on January 2nd and now use them as expensive laundry drying racks. So, this year, we thought we would offer some New Year’s “solutions” for two of the newest issues affecting property managers. Let’s resolve to solve these issues this year, and leave the gym to others!
If you lived here…you would be home by now!
Need a place to stay in Boston? Lack the cash to pay for an expensive Boston hotel? No problem, just log on to Airbnb, Craigslist, or one of the many other websites that now offer cheap accommodations in many of the finest buildings in Massachusetts! Whether you want a couch, a room, or the entire apartment, you can now secure a wonderful stay at a lower cost and without that pesky hotel tax! Sounds good, until you realize these people are staying in YOUR apartments, have keys to YOUR building, and are wandering unsupervised through YOUR halls!
Short-term rentals, such as those advertised on Airbnb, create serious concerns for property owners and managers. The most obvious concerns relate to the security of the building. Managers expend significant resources to screen all residents. This process usually includes performing a credit check, criminal background check, and prior landlord references. The purpose of this screening is to exercise due care in order to avoid allowing convicted felons and other “undesirable” tenants from entering onto the property. Managers also go to great lengths to insure that keys are only provided to residents and not shared with third parties. All of these efforts are undertaken as part of the landlord’s obligation to provide reasonable security to residents. When a resident leases out an apartment on a short-term basis, and provides a key to an unknown person, that wall of security crumbles. This new “occupant” has never been screened, may have a serious criminal background, and has now been allowed to freely enter the building and wander the halls. We have no way of knowing whether this person is practically perfect like Mary Poppins, or is a convicted sex offender that was just released from prison. Clearly, allowing residents to lease their apartments on a short-term basis creates a significant security concern both for the management staff and other residents. It is likely the greatest safety issue facing property owners today. These rentals also create issues in affordable housing where the rent is calculated based on the tenant’s income. We have had numerous cases where affordable tenants, paying $300 a month for rent, have been found advertising their apartments on Airbnb for $300 a night! Not only is this a failure to report income, but it seems to fly in the face of the entire purpose of affordable housing. Clearly, the use of an apartment for nightly or short term rentals is a significant problem.
Unfortunately, many leases, some drafted prior to the invention of the internet, fail to prohibit this use. In addition, a recent Massachusetts Appeals Court decision found that the taking of roommates did not constitute the “leasing” of the apartment, but instead was more akin to a “license”. Thus, even though the person was receiving compensation for allowing another individual to reside in their apartment, the Appeals Court did not consider this behavior prohibited by the restrictions imposed by the BRA in that case. In order to prevent this for happening in the future, let us resolve to solve this issue in 2016. First, while many leases may prohibit “sub-letting” or “assigning” the lease, we would recommend that landlord’s amend their leases to specifically prohibit both listing the apartment on the internet, as well as permitting occupancy of the apartment on a short-term basis. Specifically, the lease provision would prohibit the resident from advertising or posting the apartment for any form of use on the internet without written permission from the landlord. Likewise, it would prohibit the resident from allowing any person to use the apartment, for any period, in exchange for any form of compensation. Thus, while the resident is clearly permitted to have overnight guests, the receipt of any form of compensation renders the use improper. Additionally, the resident would be prohibited from allowing any person to possess a key to the apartment. We have created a specific lease provision which addresses these concerns and are pleased to share this with clients. Those using the RHA, NAA or other form leases should also contact these agencies or your local attorney to insure that this new language is now included.
Another “smoking” New Year
Another year, another issue with smoking marijuana. Last year, we discussed the reasons why possession of marijuana, in any quantity, and for any reason, still appeared to be “drug related criminal activity”, thereby allowing the eviction of the tenant, despite state laws “legalizing” such possession. We discussed the Federal Controlled Substances Act rendering such uses illegal under federal law, and how state laws to the contrary would not supersede such federal laws. We also discussed how this issue was likely to be determined in the future by the Massachusetts Supreme Judicial Court (see my article “The Pitfalls of Pot” for a full discussion of the topic). Unfortunately, another year has gone by and the issue still has not been address by any appellate court. While we wait for the issue to be determined by the Courts, let us resolve to solve the issue through our leases.
Clearly, a landlord has the right to limit the use and possession of marijuana through the terms of its lease. Landlords already restrict many purported legal actions through their leases, such as smoking cigarettes, possession of firearms, etc. As such, restricting the use of marijuana on the property, even if same is legal, should also be subject to such limitations by agreement. Of course, by addressing the issue directly in the lease, you avoid the potential of having to litigate the issue in court. While others may be left to litigate whether possession of marijuana is still “illegal”, a well drafted lease provision would avoid such a legal battle since the entire issue would then be one of a simple lease violation. In addition, by including such a limitation in your lease, you ensure that the residents understand and are aware of the issue, thereby increasing the chances that tenants will comply. Those of you that already prohibit smoking should be able to address the issue by simply including the term, “marijuana” in the definition of smoking. We have also prepared a simple lease addendum which we believe clearly resolves this issue. Feel free to contact us for a copy, or contact your local attorney.
As Oscar Wilde said, New Year’s resolutions are simply checks that men draw on a bank where they have no account. While we all hope that we will maintain our resolutions (at least until the snow melts), we can insure that we achieve our New Year’s “solutions”.
We wish you a happy and peaceful new year.