RaisingRentsLegally

RAISING RENTS THE LEGAL WAY

Notices to Quit with Offers to Create New Tenancies

Massachusetts Law

Peter Mark Heintzelman, Esq.

Heintzelaw.com

As the passage of time and inflation gang up on the landlord, periodically, its time to consider raising your tenants' monthly rent. Increases in residential investment property costs, include real estate taxes, insurance, water and other landlord-paid utilities, smoke detector and sprinkler costs, maintenance and repair expenses, (hopefully no) eviction-related costs, oh, and don't forget the mortgage payments. Increases in tenants rents because of such "carrying costs" are an inevitable factor of the residential housing market. And as worthy as it is to be a residential landlord, doing a social good of providing safe and decent housing to your community, you should also be able to realize a tidy profit margin somewhere along the line.

But, before you just increase rent, consider the tenant, your customer. Have they been worthy tenants, paying their rent on time (and thereby allowing you to pay your bills on time!), have they kept their apartment and common areas clean, do they allow other tenants to peaceably enjoy their tenancies, do they timely notify you of important repair concerns? Such tenancies should be fostered; many a landlord has told this author they would rather receive a lower monthly rent from a good tenant, than to move that tenant on because of rent increases, and roll the dice with a new tenant at a higher rate of rent, but with an unknown demand and capacity to inflict pains of all types upon the landlord! Just ask the local landlords who show up monthly at their area property owner's association meetings. Been there; done that. Rent increases are often a little more lenient upon the tenancy a landlord wants to foster. Just remember to, at minimum, keep up with your carrying costs.

Tenant reactions to receiving new of an upcoming rent increase, varies from tenant to tenant. Some tenants acknowledge and accept the increase, a reality of life, without problem. Other tenants may try to negotiate the rent increase, or seek other landlord services or improvements in the premises. Some tenants even go as far as calling their local board of health or code enforcement department, often complaining of conditions never reported to the landlord. Then, instead of seeing an increase in your cash flow from a rental increase, you may experience a drain of your assets in responding to tenant repair complaints (so, as always, keep your rental property in great physical condition and in compliance with the sanitary code and other laws applicable to residential housing, to reduce these risks). Some tenants respond to rent increase notices by deciding to move on.Recent statistics suggest that the average private tenancy lasts approximately two years.

A lot of factors for a landlord to consider before increasing rents! Its worth contemplating all those issues, and your approach of the tenant on the rent increase topic:

Creating a new tenancy at a higher rate of rent can be as simple as the landlord asking for, and the tenant paying, the next month's rent at the higher rate. In other words, such conduct of the parties may be conclusive evidence of an agreed upon change to the rental rate. Even better, obtain a written agreement signed by the tenants, agreeing to the rent increase, starting on a specific date. Landlords often do not understand that they can not just unilaterally increase rents. A rent increase requires the proverbial meeting of the minds; evidence of both landlord and tenant accepting a rent increase. If tenants won't agree with the landlord as to the rent increase, the landlord may look for the tenant to vacate. As tenants contemplate a rental increase, they are also wise to search for alternate housing, just to keep their options open.

Maybe the best way to approach the issue, and create a rent increase, is to approach your tenant in person, to explain the rent increase and why its necessary, and, hopefully, to sign an amendment to your already existing written tenancy agreement, or other agreement with the tenant as to the rent increase amount and due date. Don't be surprised if tenants frown at signing it on the spot; you may have to leave the written rent increase agreement with them to ponder just follow up with them after a short reasonable period of time. Thereafter, if the landlord gets no results on a written tenant acknowledgment of the rent increase, more drastic action may be had by the landlord, if the rent increase is a must:

1) Tenancies under a Lease: Tenancies under a lease, as compared with a month to month tenancy at will, prevent a landlord from imposing a rent increase upon the tenant during the term of the lease, except as in accordance with the written provisions of the lease. Therefore, a landlord who seeks an rent increase during a lease term, better make sure its written clearly in the lease. Otherwise, a landlord must await the expiration of the lease before seeking a rental increase. That doesn't mean that you don't start negotiation that rent increase before the current lease term expires. Most landlords seem to find it beneficial to notify their lessees one or two months before the lease expiration term, whether the landlord wants the tenants to vacate when the lease expires, or under what terms the tenancy can continue, including the rent increase. Hopefully, by the first day following the expiration of the original lease, you have a new written tenancy with your tenant, or a written amendment/extension to the original lease. (Note: Now is also the time for landlords to reevaluate whether they want to continue with a lease, or convert the tenancy into a month to month tenancy ). If, by the end of the lease term, the parties have not yet agreed upon the terms of a tenancy following a lease, the landlord can either seek eviction, or the parties, by their conduct of paying and accepting rents subsequent to the lease termination date, may very well be deemed to have created an oral tenancy at will.

2) Tenancy At Will - Tenancies at will with monthly rent due dates, allow a landlord, upon a minimum next full month's notice, to terminate a tenancy, with an offer to create a new tenancy at a higher rate of rent. Massachusetts General Laws, Chapter 186, Section 12 provides, in relevant part, that:

"Estates at will may be determined by either party by three months' notice in writing for that purpose given to the other party; and, if the rent reserved is payable at periods of less than three months, the time of such notice shall be sufficient if it is equal to the interval between the days of payment or thirty days, whichever is longer. Such written notice may include an offer to establish a new tenancy for the same premises on terms different from that of the tenancy being terminated and the validity of such written notice shall not be affected by the inclusion of such offer."

So, for example, a landlord who has a tenancy month to month, with the rent due date being the first of each month, could in October, serve upon the tenant a notice to terminate the tenancy effective December 1st, on or before which date the tenancy terminates, unless the tenant accepts the terms of a new tenancy, including a rental increase. In the event the tenant does not agree with the rental increase, then come December 2nd , the landlord may proceed in summary process to seek eviction of the tenant by court judgment for possession.

Common errors landlords seem to face when seeking a rental increase, include:

Not using a proper, legal, written notices to quit, in accordance with the requirements of their particular tenancy. In other words, different language, time requirements, and recipients of notices to quit vary from tenants at will, to leasehold tenants, to section 8 and other subsidized tenancies. Landlords sometimes fail to very carefully review their written tenancy agreements before serving notices to terminate a tenancy, to assure the notice comports to the requirements of content, time, and recipient(s). Sometimes, written tenancy agreements contain illegal provisions, including those provisions which affect rents, so one must be careful to know those laws and regulations, and caselaw. For example, a written tenancy agreement in Massachusetts, which seeks to set one rate of monthly rent if the tenant pays by the 1st or 5th of a month, but which also seeks to increase the monthly rent for the rest of the month, if not paid on time, would violate the provisions of General Laws, Ch. 186, Section 15B(1 )(c) , which says in relevant part:

"No lease or other rental agreement shall impose any interest or penalty for failure to pay rent until thirty days after such rent shall have been due."

Another common error is failing to serve the notices in a timely fashion. Sometimes, a written tenancy agreement may require a lessor, months before the actual lease termination date, to provide written notice to quit or to terminate tenancy, in order to be effective. Some leases have automatic renewal terms, which may extend a lease often for a whole new year, including at the same rate of rent, unless written notice of non-renewal or termination is delivered in a timely fashion.

Another common error is failing to serve copies of the notices to terminate upon the proper recipients. For example, the section 8 authority, or other subsidized rent regulation-required recipients, like RHI, or Worcester Housing Authority, or a local field agency for HUD, to name a few, may be required by the written lease provisions, or the laws and regulations governing such tenancies, to receive simultaneous service of notices to quit or termination notices, and summary process summons and complaints. Failing to prove such service can be fatal, as it may well take away the court's jurisdictional authority to hear an eviction action.

Another common error is a landlords failure to prove the tenant received the notice to quit or terminate, or that the tenant received it in time. Notices to quit are not effective until the tenant receives the notice; not when the landlord sends the notice to quit. Many landlords realize the value of hiring your local constable or sheriff to make service of process on notices to quit or terminate tenancy; I think its good money spent.

Some landlords, seeking to save legal fees, may extend themselves with their constable or sheriff to also elicit these process servers to draft the notice to quit as well again, be extremely cautious; there are different notice to quit requirements for different types of tenancies; if your process server is unaware of the differences, or not given all the relevant information, your seeking "legal services" of the process server in drafting the right notice to quit, may be fatal, or could at least cost you time and money.

These are only an example of the type of errors commonly seen, and are not meant to be all inclusive. The main point is to be careful in choosing your method of seeking a rental increase, by using the correct notice to quit with offer to create a new tenancy form, be careful in serving the notice on time and to the right recipients, and have proof of service. If you are unfamiliar with these requirements for your particular tenancy, seek legal advice.

Tenants' rights and obligations to pay rent from the date of their receipt of a notice to quit are governed by Massachusetts General Laws, Chapter 186, section 13, which provides in relevant part that "(w)henever a tenancy at will of premises occupied for dwelling purposes, other than a room or rooms in a hotel, is terminated, without fault of the tenant, either by operation of law or by act of the landlord, ... , no action to recover possession of the premises shall be brought, nor shall the tenant be dispossessed, until after the expiration of a period, equal to the interval between the days on which the rent reserved is payable or thirty days, whichever is longer, from the time when the tenant receives notice in writing of such termination; but such tenant shall be liable to pay rent for such time during the said period as he occupies or retains the premises, at the same rate as theretofore payable by him while a tenant at will ... ."{emphasis added} Landlords often have the misperception that, even if the tenant has not agreed to a rental increase, that the landlord is entitled to higher rent rates than the last agreed upon rate of rent.

Even if you cannot agree upon a rent increase with your tenant, and find yourself in Housing Court seeking an eviction judgment for possession, the Court may extend the last agreed upon rate of rent referenced in Chapter 186, section 13, even after the trial date, under the provisions of Massachusetts General Laws, Chapter 239, section 9, which reads in relevant part:

"In an action of summary process to recover possession of premises occupied for dwelling purposes ... [other than a room in a hotel, or a dwelling unit in a lodging house or rooming house wherein the occupant has maintained such occupancy for less than three consecutive months], where a tenancy has been terminated without fault of the tenant, either by operation of law or by act of the landlord, ..., a stay or stays of judgment and execution may be granted, as hereinafter provided, for a period not exceeding six months or for periods not exceeding six months in the aggregate, or, for a period not exceeding twelve months or for periods not exceeding twelve months in the aggregate in the case of premises occupied by a handicapped person or an individual sixty years of age or older, as the court may deem just and reasonable ... ."

A lot of factors for a landlord to consider before increasing rents! Its worth contemplating all those issues, and your approach of the tenant on the inevitable rent increase topic.





	RAISING RENTS THE LEGAL WAY Notices to Quit with Offers to Create New Tenancies Massachusetts Law by Peter Mark Heintzelman, Esq. Copyright 2000, all rights reserved. Heintzelaw.com As the passage of time and inflation gang up on the landlord, periodically, its time to consider raising your tenants' monthly rent. Increases in residential investment property costs, include real estate taxes, insurance, water and other landlord-paid utilities, smoke detector and sprinkler costs, maintenance and repair expenses, (hopefully no) eviction-related costs, oh, and don't forget the mortgage payments. Increases in tenants rents because of such "carrying costs" are an inevitable factor of the residential housing market. And as worthy as it is to be a residential landlord, doing a social good of providing safe and decent housing to your community, you should also be able to realize a tidy profit margin somewhere along the line. But, before you just increase rent, consider the tenant, your customer. Have they been worthy tenants, paying their rent on time (and thereby allowing you to pay your bills on time!), have they kept their apartment and common areas clean, do they allow other tenants to peaceably enjoy their tenancies, do they timely notify you of important repair concerns? Such tenancies should be fostered; many a landlord has told this author they would rather receive a lower monthly rent from a good tenant, than to move that tenant on because of rent increases, and roll the dice with a new tenant at a higher rate of rent, but with an unknown demand and capacity to inflict pains of all types upon the landlord! Just ask the local landlords who show up monthly at their area property owner's association meetings. Been there; done that. Rent increases are often a little more lenient upon the tenancy a landlord wants to foster. Just remember to, at minimum, keep up with your carrying costs. Tenant reactions to receiving new of an upcoming rent increase, varies from tenant to tenant. Some tenants acknowledge and accept the increase, a reality of life, without problem. Other tenants may try to negotiate the rent increase, or seek other landlord services or improvements in the premises. Some tenants even go as far as calling their local board of health or code enforcement department, often complaining of conditions never reported to the landlord. Then, instead of seeing an increase in your cash flow from a rental increase, you may experience a drain of your assets in responding to tenant repair complaints (so, as always, keep your rental property in great physical condition and in compliance with the sanitary code and other laws applicable to residential housing, to reduce these risks). Some tenants respond to rent increase notices by deciding to move on.Recent statistics suggest that the average private tenancy lasts approximately two years. A lot of factors for a landlord to consider before increasing rents! Its worth contemplating all those issues, and your approach of the tenant on the rent increase topic: Creating a new tenancy at a higher rate of rent can be as simple as the landlord asking for, and the tenant paying, the next month's rent at the higher rate. In other words, such conduct of the parties may be conclusive evidence of an agreed upon change to the rental rate. Even better, obtain a written agreement signed by the tenants, agreeing to the rent increase, starting on a specific date. Landlords often do not understand that they can not just unilaterally increase rents. A rent increase requires the proverbial meeting of the minds; evidence of both landlord and tenant accepting a rent increase. If tenants won't agree with the landlord as to the rent increase, the landlord may look for the tenant to vacate. As tenants contemplate a rental increase, they are also wise to search for alternate housing, just to keep their options open. Maybe the best way to approach the issue, and create a rent increase, is to approach your tenant in person, to explain the rent increase and why its necessary, and, hopefully, to sign an amendment to your already existing written tenancy agreement, or other agreement with the tenant as to the rent increase amount and due date. Don't be surprised if tenants frown at signing it on the spot; you may have to leave the written rent increase agreement with them to ponder just follow up with them after a short reasonable period of time. Thereafter, if the landlord gets no results on a written tenant acknowledgment of the rent increase, more drastic action may be had by the landlord, if the rent increase is a must: 1) Tenancies under a Lease: Tenancies under a lease, as compared with a month to month tenancy at will, prevent a landlord from imposing a rent increase upon the tenant during the term of the lease, except as in accordance with the written provisions of the lease. Therefore, a landlord who seeks an rent increase during a lease term, better make sure its written clearly in the lease. Otherwise, a landlord must await the expiration of the lease before seeking a rental increase. That doesn't mean that you don't start negotiation that rent increase before the current lease term expires. Most landlords seem to find it beneficial to notify their lessees one or two months before the lease expiration term, whether the landlord wants the tenants to vacate when the lease expires, or under what terms the tenancy can continue, including the rent increase. Hopefully, by the first day following the expiration of the original lease, you have a new written tenancy with your tenant, or a written amendment/extension to the original lease. (Note: Now is also the time for landlords to reevaluate whether they want to continue with a lease, or convert the tenancy into a month to month tenancy ). If, by the end of the lease term, the parties have not yet agreed upon the terms of a tenancy following a lease, the landlord can either seek eviction, or the parties, by their conduct of paying and accepting rents subsequent to the lease termination date, may very well be deemed to have created an oral tenancy at will. 2) Tenancy At Will - Tenancies at will with monthly rent due dates, allow a landlord, upon a minimum next full month's notice, to terminate a tenancy, with an offer to create a new tenancy at a higher rate of rent. Massachusetts General Laws, Chapter 186, Section 12 provides, in relevant part, that: "Estates at will may be determined by either party by three months' notice in writing for that purpose given to the other party; and, if the rent reserved is payable at periods of less than three months, the time of such notice shall be sufficient if it is equal to the interval between the days of payment or thirty days, whichever is longer. Such written notice may include an offer to establish a new tenancy for the same premises on terms different from that of the tenancy being terminated and the validity of such written notice shall not be affected by the inclusion of such offer." So, for example, a landlord who has a tenancy month to month, with the rent due date being the first of each month, could in October, serve upon the tenant a notice to terminate the tenancy effective December 1st, on or before which date the tenancy terminates, unless the tenant accepts the terms of a new tenancy, including a rental increase. In the event the tenant does not agree with the rental increase, then come December 2nd , the landlord may proceed in summary process to seek eviction of the tenant by court judgment for possession. Common errors landlords seem to face when seeking a rental increase, include: Not using a proper, legal, written notices to quit, in accordance with the requirements of their particular tenancy. In other words, different language, time requirements, and recipients of notices to quit vary from tenants at will, to leasehold tenants, to section 8 and other subsidized tenancies. Landlords sometimes fail to very carefully review their written tenancy agreements before serving notices to terminate a tenancy, to assure the notice comports to the requirements of content, time, and recipient(s). Sometimes, written tenancy agreements contain illegal provisions, including those provisions which affect rents, so one must be careful to know those laws and regulations, and caselaw. For example, a written tenancy agreement in Massachusetts, which seeks to set one rate of monthly rent if the tenant pays by the 1st or 5th of a month, but which also seeks to increase the monthly rent for the rest of the month, if not paid on time, would violate the provisions of General Laws, Ch. 186, Section 15B(1 )(c) , which says in relevant part: "No lease or other rental agreement shall impose any interest or penalty for failure to pay rent until thirty days after such rent shall have been due." Another common error is failing to serve the notices in a timely fashion. Sometimes, a written tenancy agreement may require a lessor, months before the actual lease termination date, to provide written notice to quit or to terminate tenancy, in order to be effective. Some leases have automatic renewal terms, which may extend a lease often for a whole new year, including at the same rate of rent, unless written notice of non-renewal or termination is delivered in a timely fashion. Another common error is failing to serve copies of the notices to terminate upon the proper recipients. For example, the section 8 authority, or other subsidized rent regulation-required recipients, like RHI, or Worcester Housing Authority, or a local field agency for HUD, to name a few, may be required by the written lease provisions, or the laws and regulations governing such tenancies, to receive simultaneous service of notices to quit or termination notices, and summary process summons and complaints. Failing to prove such service can be fatal, as it may well take away the court's jurisdictional authority to hear an eviction action. Another common error is a landlords failure to prove the tenant received the notice to quit or terminate, or that the tenant received it in time. Notices to quit are not effective until the tenant receives the notice; not when the landlord sends the notice to quit. Many landlords realize the value of hiring your local constable or sheriff to make service of process on notices to quit or terminate tenancy; I think its good money spent. Some landlords, seeking to save legal fees, may extend themselves with their constable or sheriff to also elicit these process servers to draft the notice to quit as well again, be extremely cautious; there are different notice to quit requirements for different types of tenancies; if your process server is unaware of the differences, or not given all the relevant information, your seeking "legal services" of the process server in drafting the right notice to quit, may be fatal, or could at least cost you time and money. These are only an example of the type of errors commonly seen, and are not meant to be all inclusive. The main point is to be careful in choosing your method of seeking a rental increase, by using the correct notice to quit with offer to create a new tenancy form, be careful in serving the notice on time and to the right recipients, and have proof of service. If you are unfamiliar with these requirements for your particular tenancy, seek legal advice. Tenants' rights and obligations to pay rent from the date of their receipt of a notice to quit are governed by Massachusetts General Laws, Chapter 186, section 13, which provides in relevant part that "(w)henever a tenancy at will of premises occupied for dwelling purposes, other than a room or rooms in a hotel, is terminated, without fault of the tenant, either by operation of law or by act of the landlord, ... , no action to recover possession of the premises shall be brought, nor shall the tenant be dispossessed, until after the expiration of a period, equal to the interval between the days on which the rent reserved is payable or thirty days, whichever is longer, from the time when the tenant receives notice in writing of such termination; but such tenant shall be liable to pay rent for such time during the said period as he occupies or retains the premises, at the same rate as theretofore payable by him while a tenant at will ... ."{emphasis added} Landlords often have the misperception that, even if the tenant has not agreed to a rental increase, that the landlord is entitled to higher rent rates than the last agreed upon rate of rent. Even if you cannot agree upon a rent increase with your tenant, and find yourself in Housing Court seeking an eviction judgment for possession, the Court may extend the last agreed upon rate of rent referenced in Chapter 186, section 13, even after the trial date, under the provisions of Massachusetts General Laws, Chapter 239, section 9, which reads in relevant part: "In an action of summary process to recover possession of premises occupied for dwelling purposes ... [other than a room in a hotel, or a dwelling unit in a lodging house or rooming house wherein the occupant has maintained such occupancy for less than three consecutive months], where a tenancy has been terminated without fault of the tenant, either by operation of law or by act of the landlord, ..., a stay or stays of judgment and execution may be granted, as hereinafter provided, for a period not exceeding six months or for periods not exceeding six months in the aggregate, or, for a period not exceeding twelve months or for periods not exceeding twelve months in the aggregate in the case of premises occupied by a handicapped person or an individual sixty years of age or older, as the court may deem just and reasonable ... ." A lot of factors for a landlord to consider before increasing rents! Its worth contemplating all those issues, and your approach of the tenant on the inevitable rent increase topic.