Tenant needs help: is this lease term standard and/or fair?

28 Replies

Hi BP community,

I am a tenant and had a question about the following statement in my lease agreement:

"Regardless of assignment of responsibility, tenant agrees to be responsible for the first $250.00 of any repair or maintenance required on the systems of the property for the term of the lease. This deductible applies per occurrence."

Is this a common lease term? To me, it sounds like I can get charged $250 to fix anything the landlord wants in the house. Need a new roof, I pay $250. Water heater fails, I pay $250. I don't think these are common expenses a tenant is normally responsible to help cover. I'm I right in questioning this term? Thanks!

I have seen similar terms.  That is not the norm, but that provision is not that unusual either. I personally don't think it is fair to the tenant and it could even backfire if the tenant out of fear of being charged doesn't report a water leak to the landlord and a $300 issue turns into $3000 issue.

Okay, good that's it's only a short-term stop gap measure.

Better to pay for your own mortgage, than to pay for someone else's.

And kudos for being on BP - you'll learn a ton, and be exposed to plenty of options, from climbing the property ladder to commercial investing. 

Congratulations!

I've seen the clause before and think it's what I would expect from a cheat, not an honest business person. They argue it is to keep temants from making frivolous maintenance requests but then they apply it towards a fridge compressor that breaks.  People rent a functional home and it is the Landlord's responsibility to maintain it unless a problem is caused by Tenant abuse or neglect.

At the same time, nobody forces you to sign it.

This clause stops the tenant from requesting misc little repairs. Some tenants can be very needy.  This can also help encourage tenant not to abuse the place. The 250 is a little steep. Nor do I like the wording as some things the owner is responsible for all of it like replacing a water heater.

That does seem a little steep. When we do a single family house rental, we'll often add a similar clause, but it's per MONTH and only $50. $250 pretty much guarantees the landlord will have zero repair expense (other than larger capital improvement type items). I'd say 95% of my repairs in 7 years have been < $250 if I were to break them down. 

Great responses, thank you everyone.  I requested it to be removed and so far he is refusing.  Do you guys have any suggestions for how I may be able to modify the wording to make it more fair?

Is there no other good rentals you could choose over this one?

@Brian Jurvelin you're going to just have to decide if you want to live in that house or not with that clause, there is no alternative. I never (and would never) modify a lease clause for a tenant. They are in there for a reason, and I know what they are pretty well. If I start making modification, how would I ever remember what was modified for each tenant? Makes it a lot harder to be "the decision maker" and firm when needed if I can't even remember my own lease.

That said I disagree with those clauses, however a quick perusal of the Michigan landlord tenant handbook says it is legal in your state for a tenant to agree to such a clause.

This sounds like an example I was just listening to on a different podcast. 

Ick. 

Don't walk away - run.

For that amount of money (assuming 1st / Last / SD) and $250 floating repair fee, I'd go straight to the bank and get pre-qualified for a home loan, and hit up your favorite local Realtor on the way back.  

You may not have a huge down payment amount, but that's okay. You have more options than you think.

Worst house, in the best financially viable for you neighborhood, with enough left over each month to do some minor cosmetic procedures.

2 years later, you can sell, cash out, get busy on the next place and an investment property.

Or go for a small multi-family (4 units or less).  Even if you have to partner with someone else who wants to do the same thing. 

Either way, don't lose money, don't set yourself up to lose money. 

And don't feel obligated to deal with this situation. 

"There is a world elsewhere." - Coriolanus.

You didn't say if this was a commercial lease or a residential lease. Commercial it's fine, residential it's leading to violating tax law requiring a tenant to pay for repairs or maintenance that is not damaged other than by normal wear and tear, a residential tenant pays for the maintenance, the landlord must expense it and depreciate it and in so doing can end up filing depreciation that the landlord owner isn't entitled to since they didn't pay for it.

Residential tenants cannot be held financially responsible for costs of ownership other than through the payment of rents. 

I'd suggest leave sleeping dogs lie as a tenant until an issue arises, then point it out, a tenant can't deduct repairs or maintenance. Your landlord will play h$ll trying to collect. :)

Originally posted by @Brian Jurvelin :

Great responses, thank you everyone.  I requested it to be removed and so far he is refusing.  Do you guys have any suggestions for how I may be able to modify the wording to make it more fair?

 1- I hate those type of clauses.  As a landlord, it seems like a shady way to run a business.  I make my money renting homes, not charging tenants to repair things that should be a landlord's responsibility.  That said, I do include a clause that says I am responsible for only one plumbing clog per tenancy.  If the tenant keeps doing things to clog the pipes, they will pay for it.  And of course I include wording that holds the tenant liable for any repairs that are caused by their actions or their negligence.

2- As a landlord, I drafted my leases to protect my interests, period. I have ZERO interest in altering my leases because an applicant doesn't like my wording. I would never change my lease wording at the request of an applicant. Brian, if you don't like what the lease says, just find another place to rent. It's that simple.

3- Congratulations on the marriage!

Another thing you might do is call tenant legal aid in your area and ask a quick question about the legality of this provision in MI,  this is probably something they can answer off the top of their heads and without charge. 

I would move on but if the tenant legal aid tells you it is legal you may expect to see it again however is the states where this is legal  $50 is more usual.  I have not heard of $250

I don't see a response from Michigan ?   Look for someone from your state to respond maybe they have additional info.

@Brian Jurvelin - There's a similar paragraph that's a standard clause in a lease here in Florida (Florida Association of Realtors/Florida Bar Assn Residential Lease Agreement):

"Landlord shall be responsible for major maintenance or major replacement of equipment, except for equipment for which Tenant has accepted responsibility for major maintenance or major replacement in the previous paragraph. 

Major maintenance or major replacement means a repair or replacement that costs more than $________."

But the dollar amount is blank in the standard lease form. $250 is high. I think more like $25 to $99 is reasonable...I'm thinking of maybe a broken door knob or some other easy fix that a tenant could arguably be responsible for.

I think it's perfect reasonable to ask the landlord/manager to just reduce the dollar amount in that paragraph to a more reasonable number. It's entirely plausible that they've had $250 in there for years, never gave it much thought, and never had a tenant question it.

@Brian Jurvelin it is common for a tenant to be responsible for small maintenance expenses. For example items such as light bulbs, batteries in the smoke detector or furnace filters. Tenants will also usually be responsible for maintenance items such as lawn care. These items are maintenance to keep the property in the condition you found it. The grey area is when a landlord requires you to cover repairs. This becomes a problem because typically items fail due to age or acts of God. For example the water heater could be 15 years old with an expected life of 10 years. Then you move in and it pops a leak. Now you are being charged $250 of a $1000 repair for an item was beyond its useful life. A tree could fall in your yard after a storm and now you are spending $250 to clean it up. Those are just a couple examples. You can expect at least one event in a year and maybe more.

The type of landlord that put clauses like this in their lease is going to be hard to rent from. They will raise your rent every year. When you move out, they will take any security deposit deduction they can. If your rent shows up a day late, they will have zero understanding. This is an indictor of this landlords mentality and you found a bad one.

Landlords with clauses like this are short sighted. It discourages tenants from reporting problems. If a tenant knows it will cost them $250 to fix a furnace, why would they report a problem? Not fixing a problem usually leads to a worse problem, so as @Philip McCollum pointed out a $300 repair just became a $3000 issue. 

Landlords can find themselves in legal trouble with a policy like this. For example you could end up paying $250 to replace a stove that was 15 years old and cost the landlord $350 to replace. On their taxes they depreciate the appliance over 5 years. The problem is you paid 71% of the value on an item that was 10 years past its useful life. Your rent is supposed to cover normal wear and use on items, so unless you broke the stove, you should not be paying for it. Even if you broke the stove, it is legally challenging to charge you FULL replacement cost because the item was not new. It is like when you get in a car accident. You are not responsible for the cost of buying the person you hit a new car, only replacing it with comparable.

I would find a different place to rent. Even if he takes the clause out, this is a warning sign showing you the kind of landlord you are dealing with.

Good luck and remember there are great landlords out there!

You will probably see anywhere from 100-300.00 on this.  The best place to use this is when someone is abusing repair requests.  It is pretty common to see in a lease, but not commonly enforced unless there is a good reason.

As a tenant, you can always negotiate the terms of the contract before signing. You will have more leverage if you have good credit and / or great income. I would not be surprised if this term in your contract is contrary to your state's law as well and may not even be enforceable if before a court of law depending on the actual repair or circumstances regarding the repair. The Landlord, in every state has certain responsibilities, some of which cannot be shifted to the tenant (to keep home safe and habitable is the general consensus). So, if a repair happened to arise where it was making the home unsafe or inhabitable - that responsibility, in most states as far as I know, cannot be shifted to you legally and you can make any repair fit that mold depending on how you phrase it "Hey Landlord, the oven is making a strange smell, I don't feel safe" (In most states, probably Landlord's responsibility) vs. "Hey Landlord, I think I overcooked something yesterday and now the oven is making a strange smell," (Depending on the terms, can be Tenant's responsibility). 

Of course, this is not legal advice, and my experience is only with Ohio law. Use whatever leverage you have to tell them to strike this term or at least modify it to where you are not responsible for the repair unless you are at fault. I would not sign my name to these terms - in most states, you are not responsible for general up-keep of the home and keeping it safe and habitable and Landlord should not be shifting their legal responsibilities to you as tenant.

Nada

It seems irregular.  It leaves you wide open to a number of potential additional costs. I pay for repairs to my buildings unless it is something very out of the ordinary that the tenant is directly responsible for. 

Update: The landlord reduced the deductible to $100, which I don't have to pay for any repairs found when I go through my move-in checklist.  The landlord has been very easy to deal with minus this one detail and we loved the place so we signed the lease.  Thanks again for all the helpful responses.

At least you are smart enough to read the lease terms before signing.  He was probably counting on you not paying attention.  If the guy won't change the terms, walk away.  You shouldn't have to fix up his house for him.   Many will sign a lease without reading it properly and end up paying all sorts of ridiculous fees, $75 chimney cleaning fee although they never used the fireplace, $150 carpet cleaning fee for ancient old carpet, etc.    It was the same when I researched property management firms, some had ridiculous fees buried in the contract and they wouldn't remove them.  So I found someone else.