What Happens When Your Tenant Decides to Remodel?
The best tenants are those who treat your rental like it's their own home. They keep the unit clean, handle minor issues like replacing light bulbs without bothering you, and maybe even apply some fresh paint or plant a flower garden.
Then, there are tenants who come to believe that your unit is their own property. Right down to major remodeling without your approval.
You may have heard a story or two. A tenant who built a deck off the house, or replaced kitchen and bath fixtures, or laid new flooring – sometimes surprising the landlord with a bill for the work.
A recent case in New York City sets a new bar for the unbelievable. Property owner CPW Towers is suing Central Park West resident Josefina Berman in Manhattan Supreme Court, seeking an injunction and $85,000 in damages. CPW claims that the 64-year-old tenant apparently decided to 'combine' her rental unit with an adjacent condominium that she owns in the same building, and that she is barring the landlord from entering the rental to see what's happening.
No one knew what Berman was up to, the suit claims, until neighbors heard loud noises from hammering and sawing connected to Berman's alleged attempts to take down and erect new walls and to combine the plumbing and electricity in the apartment she has rented for years with the pipes and wires in the adjoining condo she bought in 1998.
The noise and fears of damage to surrounding units was so extreme, according to court documents, that some tenants in the 414-unit building have asked CPW for rent abatements or to be permitted to break their leases and move out. Meanwhile, CPW states in its suit, Berman never turned in drawings or obtained permits for the work, that the project isn't insured and that unlicensed workers are doing the construction.
Why do some tenants think they own the place?
It would take a team of psychologists to probe all the thought that goes into a tenant developing a feeling of ownership toward a rental. Doubtless, the longer tenants live in a rental, the more attached they become to the property. But what prompts tenants to cross that line as Josefina Berman is charged with doing? We'll follow that lawsuit, which was filed on Nov. 23, 2015, and keep you posted. But another case – this one on the West Coast – may offer insight.
The scene of conflict is actually outside the Berkeley, Ca., apartment owned by the Anderson family. Tenant Wally Gorell is fighting the Andersons for the right to maintain the trees, shrubs and flowers he started planting in 1979, when he first moved in. The Andersons want to cut back the front yard plot, which now includes a two-story palm tree Gorell grew from seed and an irrigation system he installed on his own dime.
Gorell says the garden conflict is a veiled attempt to get him out of the rent-stabilized unit. He claims the original Anderson landlords loved the green space. But there is a record of complaints and efforts over the years to rein in the garden. Currently, the landlord wants to trim back the growth in order to paint the house. Gorell claims there is plenty of space to paint. He even organized neighbors in his resistance effort, some of whom joined him in blocking the landlord's workers.
An apparent hands-off approach early on seems to have set the stage for this current crisis. What if the landlord had performed regular inspections of the garden and required Gorell to limit the spread of greenery, instead of just responding to complaints? During lease renewals, the Andersons could have used a lease addendum that would have spelled out future terms governing the garden. If the issue really is about wanting Gorell to move out, the landlord could have simply non-renewed the lease.
Judges rely heavily on lease agreements when deciding cases of tenants renovating rental property. Clauses can lead a judge to approve or reject tenant demands for payment for unauthorized changes. A judge can order a tenant to undo renovations and restore a unit to its previous condition, or order the tenant to pay the landlord for unapproved renovations.
Still, a court will also consider the unwritten history between tenant and landlord. A landlord's lack of action in the face of alterations he knew the tenant was making can be interpreted as tacit agreement with the changes. Landlords can even end up paying for tenants' remodeling. All the more reason to conduct regular inspections and halt any mistreatment or modifications a tenant undertakes.
Routine inspections should be done by every property manager. To strengthen any case you may later have against a tenant who remodeled without permission, follow these steps:
- Maintain a record of inspections, including the date, who conducted it, and which areas of the unit were inspected.
- Note any unauthorized work.
- Give the tenant notices that address improper alterations and any corrections you require
- Note follow-up inspections to confirm corrections were made.
Is it ever a good idea to let the tenant remodel?
In most areas, a tenant can only make their own repairs in emergencies that pose an immediate danger or make a unit uninhabitable. States and provinces each define circumstances differently, but most specify that tenants must first notify the landlord of serious issues such as having no hot water. If a landlord fails to make repairs, a tenant may be permitted to pay for repairs and give the bill to the landlord.
Certainly there are handy tenants who offer in advance to make minor repairs on their rental in exchange for reduced rent. Many landlords willingly incorporate agreements like this in the lease.
There could even be a good payoff for the landlord who permits a tenant to make a major renovation. Improvements that a landlord may not have the time or money to make herself could boost the property value and bring in higher future rents.
Make sure that any such agreements are in writing and review contracts personally or call in professionals to assess work that you don't have the expertise to judge. Always follow the progress of agreed-upon work with routine inspections, else be prepared for some nasty surprises later.