RENTALS;  ALL THINGS RENTAL

NEW!  3/8/2021, Q: hi, before coming over to hs i had a lease executed now owner and tenant want to extend on or before 90 days /month to month  whats the easiest way to do this - see attached  A: Hi X, This lease is not with HomeSmart so we don't have a file or contract to extend. You would have to relist the property with HomeSmart and then execute a new lease agreement with the tenant. Otherwise, it would need to be extended with your prior brokerage where the file currently resides. Please feel free let me know if you have any questions.

RENTAL: ADDING ADDENDUMS, Q: My client, the owner, has extended her addendum for the potential renters to sign. At first it was 4 addendums. We finally got it down to 2 pages.  Is this ok?  A: If there is any conflicting language between the language added in the addendum and the language in the lease, the language added via the addendum will control. We just need to make sure the LL is not violating any rules and/or laws in particular fair housing, but they can add their own stipulations to the lease, and as you stated, we should always recommend they seek legal advice if they are getting into any "gray" areas...Hope this helps, Jeff.

RENTAL AGREEMENT: Q: can a Landlord cancel a Lease Agreement because he has decided that he wants to now use the property himself and not rent? A: Hi Nancy.  The Rental Agreement is a bilateral contract between the parties so it can't be broken unilaterally.  The tenant has the ability to hold the landlord to the terms of the agreement.  IF they parties are both ok with canceling it mutually, that's fine, but the landlord can't force it.  As far as the payment's etc., if the parties come to an agreement saying that the lease will be canceled and the landlord will compensate the tenant $2000 for the trouble, that would be fine.  Again, it's kind of up to the tenant on how they want to proceed.  Also, if the tenant doesn't want to let the lease go, and the landlord is trying to force it, the tenant should be advised to seek the advice of an attorney about his rights.

RENTAL, APPLICATION, LANDLORD TENANT ACT:  APPLICATION, TENANT SELECTION:  Q: Would it be possible for one of the brokers to review the attached document to make sure I am not exposing myself to risk in posting my “Tenant Selection Process” document on the MLS when it comes time to rent out the house?  I own the rental house and I wrote the document so that the co-broker and their client would know what process I would go through in selecting a good tenant.  I certainly don’t want to violate any laws or post anything inappropriate.  A: Good morning Stu. As an owner/agent, you will be held to a higher standard. At first glance, this looks OK but I'm not sure I would put it in the MLS listing details. Anything you do should be in line with ARLTA and should not discourage prospective tenants from submitting an application. At that point, you are entitled to your own approval process and processing requirements (once again provided they are in line with ARLTA). I'd probably send this list to applicants who are not immediately rejected.

RENTAL, ARLTA: EXEMPTIONS TO ARLTA;  https://libguides.library.arizona.edu/law-library/az-residential-landlord-tenant-law-guide/applicability#s-lg-box-13458466

RENTAL; ATTORNEY, LANDLORD ATTORNEY: Andrew Hull (Hull, Holliday & Holliday, PLC)  http://www.doctorevictor.com/  Forms and notices, ie, medical marijuana, five day pay or quit, fair housing, etc.

RENTAL, BROKEN LEASE REIMBURSEMENT LANGUAGE:  Tenant acknowledges and agrees that should this lease be broken for any reason, Tenant will be required to reimburse the owner the pro-rated share of the brokerage fee paid to the brokers involved in this transaction. 

RENTAL:  CC&R’s: Owner liable for tenants violation of CC&R’s:  AZ Republic article, March 15, 2020, Chris Combs Combs Law Group: If landlord pays fine, tenant may be liable under terms of the lease.

RENTAL:  CC&R’S;  Owner Liable for Tenant’s Violation of CC&Rs: By Christopher Combs | March 15, 2020  First, under the CC&Rs the HOA has no authority to fine the tenant, only the homeowner who agreed to the CC&Rs when the home was purchased. If the homeowner pays the fine for a violation of the CC&Rs by the tenant, the homeowner under the lease may be entitled to reimbursement from the tenant.  Second, the HOA can only enforce “reasonable” fines, and reasonable fines require a published schedule of fines, e.g., first violation $50, second $100, etc. Therefore, if there was no published schedule of fines, you should have no obligation to pay the $150 fine for the tenant’s speeding.

RENTAL:  COMMISSIONS; HOW MUCH TO CHARGE?  Q: I’m about to list a rental what is a typical fee for me to list a rental? Would it be 3% of a 12 month lease? Also what amount does HomeSmart take from the commission received on a rental transaction?  A: Hi X, Commissions are negotiable with rentals just as they are with sales.  You should pull up some active, pending and closed rentals for the area and see what types of compensation are being offered in that market and use that as sort of a guide.  Commissions can be in % terms or $ terms, we see both in our market.  Either way you will negotiate with the landlord as to what the total compensation will be and then how much of that you will offer as a co-broke to the MLS.  If you source the tenant as well, you could earn the entire amount of compensation negotiated for the listing.  HomeSmart fees for rentals are 10% of your gross income, $50 minimum, $300 maximum.  There is also a $10 E&O fee per transaction side.

RENTAL, COVID ADDENDUM AVAILABLE?:  Q: They wanted to know if the governor shuts down the city again for COVID (or their home state MN doesn’t let people in from AZ), would they get stuck and how would that be handled? Do I need to ask a specific landlord that question or is there a blanket response I can give them now?  A: Hi X, Great question, we have the COVID addendum for sales transactions but do not have that for rentals, so anything regarding "COVID" issues would have to be negotiated upfront between the Landlord and Tenant.  Right now the "eviction" moratorium in AZ runs to 12/31, what happens after that is anyone's guess especially since there appears to be a COVID spike happening across the country.  Bottom line is there are no provisions in the contract, the parties would need to agree to add any terms regarding that.

RENTAL; CREDIT REPORTS, LANDLORD/TENANT/…Q: Where is the best place to get a credit check done?  A: We encourage agents to suggest that landlords use one of the online resources for that.  Landlord sets up an account then invites the potential tenant in to give their private info.  That way, you can take yourself out of the equation when it comes to reviewing someone's personal information.  If you use ntnonline.com (National tenant network), you can use the promo code "Homesmart" and I think there's some kind of discount to the landlord.  There are many other sites like this out there  Hope that helps.

RENTAL: DEPOSITS, REFUNDABLE DEPOSITS, CASE STUDY: JANE DUTRA, MARCH 5, 2020 

Hi Jane, I was sorry to hear about your dad, prayers for you and your family.

Quick question, an agent sent in a "practice" lease and wanted advice on whether or not the numbers were right, etc. (attached).  How do you calculate whether or not any of the funds are "pre-paid" rent...?  For example, if they move in on the 1st of the month and pay you for just that month, that would not be considered pre paid rent, just normal rent?

If they move in on say the 15th of the month, and pay you for the remainder of that month, that would be just normal rent?  But, if they pay for the next month as well at the same time that would be considered pre paid rent?  Also, refundable deposits are considered part of the pre-paid rent along with the security deposit, but non-refundable deposits are not?  Maybe you need to come down here and teach a class for us, we all seem to have different answers!  Thanks Jane!

Answer:  First, thank you for the kind words and prayers.  It has been a difficult time but I guess it is something we all have to accept. No matter what age we are.  I will respond as I think is correct but this has always been a "gray" area and much disagreement to interpretation.  I made many calls to the Legal Hotline trying to figure it out. 

Line 66 Initial Rent:  Anything over 1 month of rent would get thrown into the additional 1.5 x $3129.00 (her amount for monthly rent on line 45).    $3129.00 x 1.5 mo. rent = $4693.50 (Max. she can collect).            Lines 69 - 71 Total $3650.00  ($3100.00 + 250.00 + 300.00)

The difference between the 1.5 and total refundable deposits is $1043.50.  My understanding is she can still collect additional rents or refundable deposits of $1043.00.  Non-refundable deposits or fees are not included in the 1.5 as you stated.

RENTAL, DISPUTES, Landlord/Tenant Disputes (Neighborhood Services Dept)     https://www.phoenix.gov/nsd/programs/landlord-tenant-counseling

RENTAL, DOG BITE:  Who is liable, tenant (dog owner) or landlord?  Arizona Republic, March 1, 2020 by Chris Combs

RENTAL, ENTRY, LANDLORD ENTRY NOTICE: Text message preferred over phone call for landlord entry notice:  https://www.combslawgroup.com/a-landlord-has-the-right-to-reasonable-access/                                    Note: Combs Law Group, Chris Combs:  Reasonable access cannot be abused.  For example, showing the home to buyers at two or three different times in one day would probably be abuse.

RENTAL, EVICTION, TENANT EVICTION PROCESS:     http://www.h3landlordlaw.com/   Hull, Holliday & Holliday, PLC  Andrew Hull, Denise Holliday, Kevin Holliday

RENTALS; EXISTING TENANT WITH SALE AND/OR LEASE TRANSFER: Q: HOW TO HANDLE EXISTING TENANT WHEN PROPERTY IS SOLD?  My client is buying a home that has an existing tenant. The seller gave 30 days notice to the buyer, who was on a mo-mo tenancy, and his tenancy ends June 30th.  My buyer would like the renter to stay on for a few months as he's (my buyer) in a lease that he needs to keep making payments on beyond the closing.  This puts the seller in an awkward situation and we all understand that. What is the best way to continue to allow the renter to stay beyond his tenancy end, and what else might we be missing  here. The renter is willing to stay on as well. We're going to try to close near July 1st, though that may be a bit tight to do so. The seller's agent is also getting counsel from her broker.  A: With the sellers permission, the buyer could reach out to the tenant to discuss the situation.  They could draft a lease that would allow the tenant to stay in the property.  However, the lease would be "contingent" upon the successful COE of the property.  If for some reason it does not close, the tenant would have to vacate.

RENTAL FILE OR REFERRAL FILE?  Q: If I show a client a rental property but the listing agent writes the lease, what does the broker’s office need/require as far as paperwork?  A: It depends.  If you are named in the lease agreement as the broker on behalf of the tenant, you will need to create a full rental file.  (See AAR Residential Lease Agreement Line #296).  If they are paying you on a referral basis and you are not named in the lease as the broker on behalf of the tenant, then we just need a signed referral agreement.  You will then create a HomeSmart referral file for this transaction.

RENTAL, FREE COMMUNITY LEGAL SERVICES, FREE COMMUNITY LEGAL SERVICES     https://housing.az.gov/general-public/landlord-and-tenant-act  Maricopa County Central Office 305 S. Second Avenue Phoenix, AZ 85003 (602) 258-3434 | (800) 852-9075 For additional information, visit the Community Legal Services website at www.clsaz.org(link is external)

RENTAL, GUEST, UNWANTED GUEST:  Chris Combs, Arizona Central Article, 10/25/2020:  “Removal of “Unwanted Guest” From Rental Home:                                                                                                https://combslawgroup.com/removal-of-unwanted-guest-from-rental-home/       The girlfriend’s sister never had any right to live in your rental home. Therefore, under the “unwanted guest” statute, A.R.S. § 33-1378, you can now simply request that a law enforcement officer remove the girlfriend’s sister from your rental home.

RENTAL, INDUSTRY INFORMATION, Lot’s of good information here:  https://www.landlordology.com/arizona-landlord-tenant-laws/

RENTAL, INVOICE, RENTAL INVOICE: RENTAL INVOICE:  If you are looking for an invoice for the landlord to pay commissions, you will find this invoice on your agent smart panel under Downloads and HomeSmart Forms.  The Closing Department does not send invoices for leases only commission instructions on sale files.

RENTAL INVOICE:  Q: I am representing my tenant as the leasee and we close on 10 May for her rental property. My client brought me three cashiers checks one made out to HomeSmart one made out to West USA and one made out to the landlord which is what the listing agent asked her to do. Now I’m getting a text message from the listing agent telling me to go ahead and give the check it’s made out to HomeSmart to my broker. Is this a normal procedure? I’ve never had an agent not run the checks through their broker?  A: All checks/payments are made out to the landlord or the listing brokers trust account.  (FYI, HomeSmart does not maintain a trust account, earnest monies and move in funds are always made out to the landlord if HomeSmart is the listing agent).  Use the form titled Rental Invoice-Tenant which is located on your RSA Portal in the downloads link.  Present this Invoice to the listing agent to specify and document the commission owed to you and HomeSmart.

RENTAL, LAWS, LANDLORDOLOGY, ARIZONA RENTAL LAWS:   https://www.landlordology.com/arizona-landlord-tenant-laws/

RENTAL, LEASE PURCHASE ADDENDUM:  See  lease purchase addendum in pdf files, LANGUAGE.

LEASE:  CANCELLATION AGREEMENT TO INCLUDE W/PC, “Seller must provide a written, signed lease cancellation agreement acceptable to the buyer no later than 48 hours after contract acceptance.”

RENTAL, LICENSING, PROPERTY MANAGER LICENSING:  Are there any exceptions to the requirement that an Arizona property manager have a broker's license?                                                     https://www.allpropertymanagement.com/propertylaw/property-management-law-in-arizona.html

RENTAL: LOCKBOX ON RENTAL LISTING…? Please know that putting a lock box on the property requires the written permission of the tenant.  Alyssa said she did not do this, so the lock box will need to be removed.  Also, at this point, the terms of the lease agreement are between the owner/landlord and the tenant.  You, as the listing agent cannot give the tenant notice and promise a return of any rent amounts or anything else.  This would need to come directly from the owner/landlord.  I know it gets difficult sometimes to juggle a rental that's for sale, but these are rules that need to be adhered to.

RENTALS; MAXIMUM DEPOSITS, LANDLORD TENANT ACT:  FYI (NO ACTION REQUIRED) - Please be aware on any future lease transactions,  the maximum allowable refundable security deposit and pre-paid rents (including pro-rated rents)  may not exceed 1.5 x the monthly rent. If the tenant offers to pay more, then have the Tenant state in writing that they are "Voluntarily" paying more than the AZ Residential Landlord Tenant Act allows. Thank you.    “Tenant acknowledges that they are voluntarily paying more than the AZ Residential Landlord Tenant Act allows for refundable security deposits and pre-paid rents.” OR  "Tenant acknowledges that the maximum allowable refundable security deposit and pre-paid rents (including pro-rated rents)  may not exceed 1.5 x the monthly rent as per the AZ Residential Landlord and Tenant Act.  Tenant is Voluntarily paying more than the AZ Residential Landlord Tenant Act allows."

RENTALS, MOVE IN MOVE OUT CHECK LIST: SEE BELOW PLUS STATEMENT OF DISPOSITION OF DEPOSITS AND ACCOUNTING...

RENTALS; RELEASE/REMOVE TENANT FROM LEASE, "All parties agree that Z is hereby removed/released as tenant from the lease dated xx/xx/xxxx for the property located at 123 Main St, Tempe, AZ.  Z is hereby relieved from any further responsibility and liability regarding said lease."  (All parties should sign, Landlord(s), Remaining Tenant(s), along with Tenant who is being relieved).

RENTAL, RENEWAL WHEN NOT HS FILE:  Hey, guys. First of all, if we weren't involved in negotiating the original lease, we can't get involved in that piece of business now. Your guy is our client on whatever he is purchasing, but you are not his guy when it comes to the existing lease. In addition, as you know landlords screen prospective tenants heavily before offering to sign a lease. For the tenant to think he can unilaterally substitute someone else and simply notify the LL is not realistic.  The parties should be advised to work this out directly or consult an attorney who specializes in landlord/tenant disputes.

RENTALS, REPAIR ISSUES, ISSUE: We are required to send licensed contractors, which we have done and which we will continue to do. Making statements that our actions are insufficient, that the licensed contractor is unqualified and that you will circumvent our authority is not a misunderstanding on our part. Additionally, Arizona law and your lease require that you use your best efforts to mitigate any secondary damage or it will be YOUR responsibility.  Again, we encourage you to read the ARLTA to better understand your rights and responsibilities as well as the rights of the landlord.  This matter is closed.  RESPONSE:  They should reach out to an attorney as soon as possible.  Please follow this link for further information:  

"If you are seeking guidance concerning the Residential Landlord and Tenant Act you may wish to consult an attorney. Public members who are not represented by an attorney, may find it helpful to contact free community legal services:" https://housing.az.gov/general-public/landlord-and-tenant-act

RENTAL, SALE IS SUBJECT TO THE LEASE: WHAT HAPPENS IF PROPERTY IS SOLD?   The sale is subject to the lease.  Arizona law says the tenants get to stay in the property through the term of their current lease.  Terms and conditions of the lease cannot be modified.  So, the tenants get to stay, no changes.  They will start paying rent to the new owner, however.

RENTAL, SECURITY DEPOSITS, LANDLORD TENANT ACT:  SECURITY DEPOSITS (Personal Property) NO FORWARDING ADDRESS:  Q: The lease ended and the landlord sent the security deposit check out in a timely manner.  The check was returned with no forwarding address, and the phone number the landlord had for the tenant is no longer working.  Does the landlord need to do anything other than document the returned check, and then wait for the tenant to realize they never got their money back and call?  A: 12 mos.  See landlordology, ARS 33-1370. Abandonment; notice; remedies; personal property; definition

RENTAL, PROHIBIT SHORT TERM RENTALS, PROHIBIT, HOW PROHIBIT…?NEIGHBORS CAN FORM HOA TO PROBIBIT SHORT TERM RENTALS:  Arizona Republic Article October 27, 2019: HERE  Chris Combs

RENTAL, SHORT TERM RENTALS: airbnb  9/19:  Per Laurie, no file required.  The vendor is acting as the paid property manager, vendor manages the entire process, RE License not required, ARLTA does not apply, vendor handles all payments, fees, complaints, bookings, etc through their private, propriety website.  Q: Hello - if I want to list my rental property on airbnb, are there any requirements that I need to satisfy for HomeSmart?  A: If the lease is less than a two week period, you will not need to create a HomeSmart Transaction File.  You will identify yourself as holding an active AZ Real Estate License, but HomeSmart will not be mentioned anywhere in the paperwork, you will essentially be on your own. Greater than two weeks will require a HomeSmart Transaction File.  Please call with any questions.  Q: Thanks Jeff.  If I don’t mention HomeSmart and on my own, why do I need to create a transaction? Just trying to understand.  A: That is our policy right now, < 2 weeks does not require a file. > 2 weeks then we need to have a file set up.  Thanks for explaining it’s a policy thing. 

RENTAL, SHORT TERM RENTALS NOT A CC&’Rs-PROHIBITED “BUSINESS ACTIVITY”: Arizona Republic Article, December 6, 2020:  Chris Combs:                                                                         https://combslawgroup.com/short-term-rentals-not-a-ccrs-prohibited-business-activity/

RENTAL, TENANT BUYING PROPERTY FROM LANDLORD, LANGUAGE FOR CONTRACTS: “This lease shall terminate at close of escrow.  Seller agrees to credit buyer $XX at closing to account for both refundable and non-refundable deposits.”

 

Plus put something in the lease you write for tenant to protect you in case they end up buying the Rental Property (See Listing Language for verbiage that protects Listing Agent):  “If this lease develops into a sale between the landlord and tenant, seller agrees to compensate the Sellers Agent X% of the sales price at COE.”

 

RENTAL, TENANT HAS POSSESSION; You can put in private remarks no showings until offer is accepted due to tenant occupancy...agents get irritated with that but if that is your sellers instructions, so be it.

 

RENTAL, Tenants Rights and Responsibilities Handbook (Arizona)  (NEED LINK FROM WORK)

RENTAL, TERMINATION OF TANANCY AND DISPOSITION OF DEPOSITS, USE:  Statement of Disposition of Deposits and Accounting Form in zipForms

 

RENTAL, TREBLE DAMAGES, https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=treble+damages

RENTAL, VERBAL LEASE:  Q: I am working with a self-employed buyer who’s been renting a house that the landlord wants to put on the market. Landlord offered the house first to my buyer, but they could not come to terms.  Now the landlord called and said he’s sending an email telling the tenant to move out by February 1. Can you tell me legally where the tenant/prospective buyer stands? Currently, tenant has no written lease.          A: So, this is an "oral" lease agreement?  Was it "week to week" or "month to month?"  If week to week, that is acceptable notice.  If month to month, he should have given notice on Jan 1 to vacate by Feb 1.  Here is what the AZ Tenants Rights and Responsibilities Handbook says:  Oral Lease Agreements   1. Agreements to rent for one year or more must be in writing (see “Signing a Lease,” above).  2. If you have an oral agreement, it can be week-to-week or month-to month. Terms and conditions are negotiable from one term to the next.  JT

MOVE-IN/MOVE-OUT CHECKLIST:  The MOVE-IN/MOVE-OUT checklist should always be used to document the condition of the property at the beginning and end of the lease.  Photos are also helpful to document the condition of the property.

As for an accounting of monies, there is a form on zipForms and/or TransactionDesk the landlord can use titled STATEMENT OF DISPOSITION OF DEPOSITS AND ACCOUNTING (see screenshot below). Of course the landlord can use this or any other from they desire, but please remember that Arizona law mandates that the landlord must return the tenants security deposit and any other refundable deposits within 14 business days after the termination of the lease.  The landlord must also provide an "accounting" to the tenant(s) as to their security deposit and any deductions withheld from that.

 

 

 

 

 

 

 

 

 

 

COMMISSION DISPUTE: JudyXGillum Case Study:  February 27, 2020  On Thu, Feb 27, 2020 at 2:35 PM CatherinexSchaeffer <broker@realtyrevelation.com> wrote: 

COMPLAINT:  Good Afternoon Judy and Diane, I am writing to let both of you know there is a commission dispute on this transaction.  Our agent, Leo Daigle, the selling agent, has written confirmation that the commission on this transaction was to be 3% (see attachment).  The commission advertised after contract negotiations on the MLS is 2.5%.  Our agent, Leo, did not challenge the commission as his obligation pursuant to Arizona AdministrationCode R4-28-1101 (D) (see attachment area highlighted in yellow) to his client is as follows:

 

A licensee shall not allow a controversy with another licensee to jeopardize, delay or interfere with the initiation, processing or finalizing of a transaction on behalf of a client.  This does not obligate a licensee to agree to alter the terms of employment or compensation agreement or to relinquish the right to maintain an action to resolve the controversy.  

 

Leo, has followed the code to ensure he has represented his clients interest to the fullest. I am certain this must have been a typo on the listing agents part.  However,  this notice serves as our demand for the full 3% owned to Leo.  I am instructing title to not disperse any commission until this controversy is resolved. 

 

 

RESPONSE:  Hi X, I talked with Debbie Olson from Pioneer Title regarding their decision to hold the commission checks for this transaction until an agreement is reached.  Her position is basically that they are requiring us to resolve this now rather than wait and go through the mediation process at some later date.  I also asked for input from the other Consulting Brokers here at HomeSmart along with reviewing the REALTOR Code of Ethics and opinions from the AAR legal hotline (attached).

 

The key decision factor for all parties who have reviewed the information is your email dated Jan 21 (attached) whereby you state "You are welcome. They have signed they want you to have 3% as you requested in commission. We should have no issue there."  I know you have said this was a mistake (typo) however everyone who has looked at this agrees that regardless of whether it was a mistake or not, it's a commitment from you to pay the cooperating agent/brokerage 3%.  Also, as per the legal hotline, "Commission agreements and any amendments between brokers can be verbal and should be enforceable"  and  "Verbal co-broke agreements between a listing broker and a buyer’s broker are enforceable."  Based on this, our opinion is that the 3% communicated in writing via email is going to be valid and enforceable even more than a verbal agreement.

 

Additionally, the REALTOR Code of Ethics states the following:

 

Article 3 

Standard of Practice 3-2:  Any change in compensation offered for cooperative services must be communicated to the other REALTOR® prior to the time that REALTOR® submits an offer to purchase/lease the property. After a REALTOR® has submitted an offer to purchase or lease property, the listing broker may not attempt to unilaterally modify the offered compensation with respect to that cooperative transaction. (Amended 1/14)  

According to the timelines provided, the co-broke of 2.5% was entered into ARMLS on 1/26/2020 which was after the offer of 3% was communicated on 1/21/2020 and after the offer was signed and submitted on 1/23/2020.  This would be considered a violation of SOP 3-2 of the Code of Ethics.

 

Our recommendation to resolve this is that you go ahead and send written notice to the title company to increase the buyers compensation to the 3% offered on Jan 21 and chalk it up to experience...there really is no other viable option.  I'll give you a call this afternoon to follow up.  Jeff.

Attachments: 1) Judy email offering 3%, 2) aaronline article “verbal offers between listing broker and buyers broker is enforceable,” 3) “aaronline article verbal co-broke with listing broker is enforceable,”

Home

NEXT

BACK