Chapter 3 Basic Rent Rules

• Library: Every Landlord's Legal Guide (Nolo) (2020 Ed.)

CHAPTER 3 Basic Rent Rules

How Much Can You Charge?

Rent Control

Property Subject to Rent Control

Rent Increases for Existing Tenants

Increasing Rent When a Tenant Moves

Legal or "Just Cause" Evictions

Registration of Rental Units

Deposits and Notice Requirements

When Rent Is Due

First Day, Last Day, or In-Between?

When the Due Date Falls on a Weekend or Holiday

Grace Periods for Late Rent

Where and How Rent Is Due

Where Rent Must Be Paid

Form of Rent Payment

Changing Where and How Rent Is Due

Late Charges and Discounts for Early Payments

Returned Check Charges

Partial or Delayed Rent Payments

Raising the Rent

When You Can Raise Rent

How Much Can You Raise the Rent?

Avoiding Tenant Charges of Retaliation or Discrimination

FORMS IN THIS CHAPTER

Chapter 3 includes instructions for and a sample of the following form:

• Agreement for Delayed or Partial Rent Payments

The Nolo website includes a downloadable copy of this form. See Appendix B for the link to the forms in this book.

One of your foremost concerns as a landlord is receiving your rent—on time and without hassle. This chapter outlines basic state and local rent laws affecting how much you can charge, as well as where, when, and how rent is due. It also covers rules regarding grace periods, late rent, returned check charges, and rent increases.

Avoiding Rent Disputes
Here are three guidelines that can help you and your tenants have a smooth relationship when it comes to rent:

• Clearly spell out rent rules in your lease or rental agreement as well as in a move-in letter to new tenants.
• Be fair and consistent about enforcing your rent rules.
• If rent isn't paid on time, follow through with a legal notice telling the tenant to pay or move—the first legal step in a possible eviction—as soon as possible.

RELATED TOPIC

Related topics covered in this book include:

• Lease and rental agreement provisions relating to rent: Chapter 2
• Collecting deposits and potential problems with calling a deposit "last month's rent": Chapter 4
• Compensating a manager with reduced rent: Chapter 6
• Highlighting rent rules in a move-in letter to new tenants and collecting the first month's rent: Chapter 7
• Cotenants' obligations for rent: Chapter 8
• Rent withholding and other tenant options when a landlord fails to maintain the premises in good condition: Chapter 9
• Tenants' obligation to pay rent when breaking a lease: Chapter 14
• Accepting rent after a 30-day notice is given: Chapter 14
• Evicting a tenant for nonpayment of rent: Chapter 17
• State rent rules: Appendix A.

How Much Can You Charge?

In most states, the law doesn't limit how much rent you can charge—you are free to charge what the market will bear at the beginning of the tenancy, and increase the rent accordingly throughout the tenancy. However, in some cities and counties, and in California and Oregon, rent control ordinances and laws closely govern how much rent a landlord can legally charge existing tenants. And in Connecticut, which does not have rent control, tenants may challenge an initial rent or a rent increase that they believe is excessive. (Conn. Gen. Stat. Ann. §§ 7-148b and following.)

For a new tenancy, it's up to you to determine how much your rental unit is worth. To do this, check rents of comparable properties in your area, and visit a few places that sound similar to yours. Local property management companies, real estate offices that handle rental property, and online ads can also provide useful information. In addition, local apartment associations—or other landlords you meet at association functions—are a good source of pricing information.

Many wise landlords choose to charge just slightly less than the going rate as part of a policy designed to find and keep excellent tenants. As with any business arrangement, it usually pays in the long run to have your tenants feel they are getting a good deal. In exchange, you hope the tenants will be responsive to your business needs. This doesn't always work, of course, but tenants who feel their rent is fair are less likely to complain over trifling matters and more likely to stay for an extended period.

Rent Control

SKIP AHEAD

Unless you own property in California, Oregon, or the District of Columbia; or in certain cities in Maryland, New Jersey, or New York, you aren't affected by rent control and can skip this section.

Communities in only five states—California, the District of Columbia, Maryland, New Jersey, and New York—have laws that limit the amount of rent landlords may charge. Typically, only a few cities or counties in each of these states have enacted local rent control ordinances (also called rent stabilization, maximum rent regulation, or a similar term), but often these are some of the state's largest cities. The entire state of Oregon has rent control; and California has both statewide rent control and numerous local ordinances.

RESOURCE

California rent control. California landlords should consult The California Landlord's Law Book: Rights & Responsibilities, by Nils Rosenquest and Janet Portman and The California Landlord's Law Book: Evictions, by Nils Rosenquest. These books are published by Nolo and are available at bookstores and public libraries. They may also be ordered directly from Nolo's website, Nolo.com, or by calling 800-728-3555.

The Rent Control Board In most cities, rent control rests in the hands of a rent control board of five to ten people. Board members often decide annual rent increases, fines, and other important issues. (In many areas, the law itself limits how and when the rent may be raised.)
The actual rent control ordinance is a product of the city council or county board of supervisors. But the rent control board is in charge of interpreting the provisions of the law, which can give the board significant power over landlords and tenants.
California's statewide rent control law, new as of 2020, does not provide for a rent control board; neither does Oregon's law.

Rent control laws commonly regulate much more than rent. For example, owners of rent-controlled properties must follow specific eviction procedures. Because local ordinances are often quite complicated and vary widely, this book cannot provide details on each city's program. Instead, we provide a general description of what rent control laws and ordinances cover.

If you own rental property in a state or city that has rent control, you should always have a current copy of the law or ordinance and any regulations interpreting it. And be sure to keep up to date; rent control laws change frequently, and court decisions also affect them. It's a good idea to subscribe to publications of the local property owners' association, and pay attention to local politics to keep abreast of changes in your rent control ordinance.

CAUTION

Know the law or pay the price. Local governments typically levy fines—sometimes heavy ones—for rent control violations. Violation of a rent control law might also give tenants a legal ground on which to win an eviction lawsuit—and even sue you.

Property Subject to Rent Control

Not all rental housing within a rent-controlled state or city is subject to rent control. Generally, new buildings as well as owner-occupied buildings with two (or sometimes even three or four) units or fewer are exempt from rent control. Some cities also exempt single-family rental houses and luxury units that rent for more than a certain amount.

Rent Increases for Existing Tenants

Rent control laws and ordinances have mechanisms for limiting, or capping, rent increases for existing tenants. Here are just a few common examples.

Annual increases. This approach allows a specific percentage rent increase each year. The amount of the increase can be a fixed percentage or a percentage tied to a local or national consumer price index.

Increased expenses. Some rent control boards have the power to adjust rents of individual units...