Lorena McMullen
Published February 9, 2012 | 
In my market area, I have seen an increase in the leasing property and requests for property owners to accept Section 8 tenants. I have personally dealt with Section 8 rentals for over 15 years and know how Section 8 rentals work.
There are a few things that you need to know when you are considering leasing a property with the Section 8 program.The term, “Section 8″ refers to a number of federal subsidy programs that allow a people of limited means to rent housing. The “tenant” pays a part of the rent, while the federal government pays the difference. The section 8 program is under control of the United States Department of Housing and Urban Development, or HUD, administered locally through community housing centers. (Some tenants qualify to have their entire rent paid by Section 8.)Renting section 8 can have the same success rates as expected with private rentals once you understand the legal and practical differences.
Rule #1 – DO NOT ENTER INTO A ‘SIDE DEAL’ WITH THE TENANT FOR ADDITIONAL RENT! I have heard Section 8 tenants are asking property owners and agents to do this so they can lease properties that are over their approved rental vouchers.
For example, the landlord wants $1,200 per month; the HUD lease states the rent is $1,000 per month, the landlord signs the HUD lease with the tenant, then they draw up an addendum they do not include back to HUD that states the tenant will pay the landlord an extra $200.00 per month to make the $1,200 rent the landlord wanted. THIS IS ILLEGAL! The penalties are severe!! Try and collect the $200.00 in court or try to evict the tenant for not paying – The landlord will lose all the way around!
There are more requirements that a landlord needs to know about to comply with Section 8 guidelines when leasing property to a prospective section 8 recipient.
* A housing inspection required to meet HUD’s quality housing standards.
* You will be signing a HUD lease with the tenant.
* Time limits for repairs and complaints
* Lead-paint inspections on target housing built before 1978. Unit owners have responsibilities to:
* Disclose known lead-based paint hazards to all potential residents before the execution of a lease.
* Provide all prospective tenants with a copy of “Protect Your Family From Lead in Your Home”
* When necessary, perform paint stabilization to correct deteriorated paint.
* Each time an activity performed, you must tell tenants about the conduct of lead hazard reduction activity, in advance, give a Renovate Right Brochure, and signed
Pre-Renovation Disclosure
* Provide a Clearance Test, if required
* Conduct lead hazard reduction activities when required by the PHA (The Public Housing Authority)
* Perform all work by required HUD prescribed safe work practices & conduct clearance activities, when required, and
* Perform ongoing maintenance. As part of ongoing maintenance, the owner must give written notice to each assisted family asking occupants to report deteriorated paint. The notice must include the name, address, and phone number of the person responsible for accepting the occupant’s complaint.
The booklet can copied by clicking on the following link: http://www.epa.gov/lead/pubs/renovaterightbrochure.pdf
Recently, here, there has been an increase in Section 8 rental applicants on property due to our economy.
As a property owner, you can offer a valuable community service to people who are less fortunate by providing clean, descent, housing to folks who otherwise could not afford it. You simply need to understand the requirements and processes involved!
*** SOME STATES/COMMUNITIES REQUIRE THAT A LANDLORD or PROPERTY OWNER ACCEPT SECTION 8 TENANTS – CHECK AND MAKE SURE WHAT YOUR MUNICIPALITY REQUIRES.
Published November 4, 2011 | In order to comply with the Michigan Security Deposit Act, your lease must have specific language and you must comply with the specific security deposit requirements. As a landlord, violating any of the requirements could result in financial and legal repercussions. Both the Landlord & Tenant have duties and specific acts required of both of them regarding the Security Deposit Act.
Michigan’s Security Deposit Act requires specific limits on the amount of the security deposit, specific requirements, mandatory language and notice provisions, written communications, mailings, and strict compliance of time limits. As a landlord, you must know and adhere to these requirements. Violating the Security Deposit Act could result in large financial penalties and prohibit you from collecting money from the tenant for past due rent and damages.
WHAT IS A SECURITY DEPOSIT?
The security deposit is an amount of money paid by the tenant to the landlord other than the first rental payment whether it be for a weekly, bi-weekly or monthly rental period. The security deposit remains the TENANTS PROPERTY, but is held by the landlord for the term of the lease. The security deposit is to ensure a tenant pays the rent, utility bills, and at the end of the lease, returns the property in the proper condition as required by the lease. The maximum amount allowed to be collected as a security deposit is 1.5 times the amount of monthly rent.
As an example, if the rent is $1,000.00 per month, the MAXIMUM SECURITY DEPOSIT ALLOWED would be $1,500.00. Any “refundable” fees are deemed by definition, to be security deposits; non-refundable fees are not considered security deposits. A non-refundable fee may not cover any item covered by a refundable fee. You must have any fee clearly stated as to the purpose of the fee and if the fee is refundable or non-refundable.
Once a lease has ended, the tenant has a right to the return of the entire security deposit UNLESS the landlord can substantiate a claim to it because the tenant owes unpaid rent, unpaid utility bills or has damaged the property beyond “reasonable wear & tear”.
While this is only one of the numerous laws that affect the leasing of residential property in Michigan, a landlord needs to be aware of the requirements and must ensure their compliance before they consider leasing their property. Below you can read the actual law and as always, if you need help, contact a well-qualified attorney well versed in leasing law for legal advice!
To find out more about Michigan’s Security Deposit Act, visit http://www.legislature.mi.gov/documents/mcl/pdf/mcl-Act-348-of-1972.pdf
Published October 25, 2011 | In today’s real estate market, many folks have opted to lease their property or investing in rental properties here in Michigan. Many landlords are unaware many of the required leasing and landlord laws. There are federal, state, and local laws governing the leasing of residential real estate in Michigan – violating any one of them could open you up to a number of legal liabilities; both civil and yes, even criminal violations! Leasing property is definitely a “specialized niche” in the Michigan real estate market.
Whether choosing a management company, a real estate agent or broker, or doing-it-yourself, you, as the property owner, MUST to be aware of the numerous requirements to protect yourself and your investment to reduce your exposure. Many have the misconception that leasing property is “easy”. One sure way to know if the person/company/agent you are considering has specialized knowledge is to know the requirements yourself. You need to have the knowledge in order to ask questions on specific requirements. Can they tell you what the Michigan Security Deposit Act is and the requirements? What about the Michigan Truth in Renting Act? SCRA Law? What law was passed in 2010 that is requires specific language be on all Michigan Residential Leases? Not having a required clause or having a clause in your lease that is contrary to the law, could result in serious financial harm or penalties – Many of the leases out there do NOT meet the numerous legal requirements.
Before you or someone representing you is allowed to put a for rent or lease sign in the ground, you need to be confident that the agent or company you choose knows the legal requirements and systems in place to protect you and your investment. Do they and you know the fair housing laws and how to apply them to ensure compliance? What kind of documentation do they keep to ensure compliance with the law? How do they process applicants to ensure compliance? Knowing what to ask, the necessary procedures in order to comply with the laws, documentation of policies and procedures, as well as making sure the property lease meets the legal requirements is imperative.
In addition, landlords need find an attorney who specializes in rental properties/leases they can contact before any need arises. The same recommendation applies to agents/management companies and brokers. The attorney they use needs to be a “specialist” in the field of leasing residential properties. In order to interview an attorney, you as the property owner should know the laws and requirements in order to ask questions when you are interviewing them. Additional questions you may want to ask are: Do they represent large complexes/groups in leasing residential property? How do they & how often do they get legal updates on leasing property? Does the attorney represent landlords/property owners only?
You need to know as almost as much as the people you entrust your investment to in order to make an educated decision on the people you choose to represent you.
Contact you local community college, community education center, or local board of Realtors to inquire if they offer courses for leasing property.
Published June 14, 2011 | 
Costly Michigan Landlord Tenant Case
Every landlord in Michigan should be aware of the March 2,
2010 Unpublished Michigan Court of Appeals Case No. 285924, that involved a
Grayling Michigan landlord. This case is a perfect example of how costly violating Michigan Leasing Laws can be.
Background: The tenants, Gary and Patricia Christy, had
leased a residential property from the landlord, Charles Fick, in 1998 for $300
month.
In 2005, after the tenants had
not paid the rent, the landlord went to the property. Upon visiting the property, the landlord
determined the tenants had abandoned the home and were no longer living there
even though the tenants had left a few items inside the home. The landlord
placed the items into storage and changed the locks on the home.
The tenants filed a lawsuit against the landlord claiming
the landlord violated Michigan’s Anti Lockout Statute (MCL 600.2918) and
Statutory Conversion (MCL 600.2919a).
The Court Case: The landlord argued the defendants had plenty
of opportunities to retrieve the property, were behind in rent, and abandoned
the premises. The tenants argued the landlord had unlawfully locked them out of
the property and moved a large quantity of valuable equipment into storage
where it was ultimately damaged.
Jury Findings: The jury found for the tenants on the two claims.
The jury granted $141,500 in damages for the anti-lockout claim and
$89,000 on the conversion claim. The conversion claim was trebled for a total of $267,000. Damages were ultimately allowed, however, for only one of the claims.
The Award: The court ultimately issued a final judgment,
including attorney fees and costs but excluded statutory interest in the amount
of $299,256.21
As I read this case, I thought it was a perfect example of
why landlords must know what they can and cannot do when leasing property.
To put the jury award into prospective, I did the math. The landlord in this case leased the property
for $300 a month or $3,600 a year. Over the 7 years the tenants rented the property, the gross rent receipts for the 7
years totaled about $25,000. At that rental rate, it would take about 83 years to make the amount of the
judgment back, not including maintenance, taxes and insurance! Ouch!! To read the actual Michigan Court of Appeals Case click on link below:
http://coa.courts.mi.gov/documents/OPINIONS/FINAL/COA/20100302_C285924_43_285924.OPN.PDF
Published June 14, 2011 | Why a blog on leasing property in Michigan? Leasing property requires a lot of knowledge and is a specialty in the field of real estate. A lot of folks seem to think it’s easy until they learn otherwise. I too thought it would be “easy” until I found out otherwise.
So you have an idea of my background in leasing, I should explain the how and why. 
As a kid, I loved collecting rent checks because when I did, Mrs. Estep would always give me chocolate. I grew up “in the business” so I thought it was a natural progression for me to become a landlord. My parents, my grandmother and uncle had rental properties. Being a landlord appeared to be a great way to make money. I started looking for investment rental properties for myself in 1994.
The best thing that could have happened to me happened after I had purchased my first 4 unit apartment building. This event happened about 3 months after I purchased the building. Within 2 months of the purchase, I had to evict a tenant that had failed to pay the rent. When I purchased the building, I kept the lease the former owner had signed with the tenant (Big Mistake). Since I had no idea how to evict someone, I hired an attorney to help me through the process.
When I went before the judge, the first thing I was asked for was a copy of the lease. The judge took a couple of minutes to read the lease and after they were done reading it, proceeded to tell me why I was not entitled to any back rental fees and because the lease violated the Security Deposit Act, I could be made to pay the tenant 2 times the amount of the security deposit, etc. By the time the judge was done, my knees were shaking. At that time, I decided that I needed to know a lot more about leasing property.
I went on a mission to read everything I could on leasing properties. I researched the laws, joined rental investment groups, went to fair housing seminars, spoke with other landlords, and found an attorney who specialized in real estate and leasing properties.
With the current real estate market here in Michigan, a lot of folks are leasing their homes out and a lot of people are taking advantage of the lower home prices and becoming landlords. I hope to offer a resource to folks who are leasing properties by supplying a lot of useful information, good resources, some good stories, a few laughs, and tips and tricks about leasing property here in Michigan.
Thanks for stopping by!
Lorena
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