Can I require tenants to pay for a home warranty? Should I?

Question

I work for a small real estate management and development company in San Francisco, CA. We only manage our own portfolio. We are also always building several projects to add to our portfolio using our own long-term skilled workers. However, anytime a tenant has a problem in their building, I have to pull my skilled builders to respond to a service request which throws off the development arm's productivity. My question for you all is, can I have a tenant pay for a home warranty as condition of their lease? Does anyone know if it violates the rent ordinance in some way?

Any feedback or ideas would be greatly appreciated.

Kim Meredith Hampton · Answer

@George Nyquist Maintenance is part of investing in real estate. I find that home warranties can be the most difficult, cumbersome and unqualified people to deal with regarding your asset. Here is a copy of a blog I wrote on Home Warranties:

First, as a Property Manager for over 20 years I have found that Home Warranties to be an absolute nightmare when it comes to tenants, owners and warranty companies.

I find that most of the time they magically don't cover the item that you are calling about, and you end up paying a service call fee, calling another vendor and then paying for and repairing it anyway.

They also take forever to get someone out to take care of anything. I think that most of the time they make people frustrated and you end up losing money in the end.

Typically the vendors they send out undercut each other to get the work, but then end up making no $, so your job falls to the bottom of the list!

Waiting for them to replace or warranty is a real issue with tenants in the property. The tenant, the property manager or owner must pay for the service fee immediately, and then we play the hurry up and wait game!

If you do purchase, it's important to make sure that you know your policy inside and out, what does it and does not include.

Regarding have the tenant pay; I have seen owners require tenants pay the "service fee", but not for the warranty itself or if they caused damage, that is your property, your cost

Thomas S. · Answer

You are working for a property management company and you have to go to the internet for a answer regarding your state landlord tenant regulations. There is something seriously wrong with this scenario.

Ariel Smith · Answer

I agree with Account Closed and think it would be best to hire on someone to handle maintenance. If you are managing more than one building it would be best to have a person like this on your team.

Account Closed · Answer

Why dont you hire a maintenance person to handle these problems?

Greg H. · Answer

Could you require it ? Yes Should you ? Absolutely not

My experience has been even when you require the tenant to pay the trade fee of $75 , the tenant will avoid the fee at all costs. When the a/c drain line is clogged, they will just throw a towel down to catch the water. When the disposer leaks, a bucket will save the tenant $75

The property is your asset and you no doubt want to protect it by being in charge of the maintenance. Forcing the tenant to pay will cost you far more in the long run

Jana Hristova · Answer

Greg, I agree with that. Many owners in our area will cover repairs only if the repair is over $100. I can see the benefits of that, no calls for things that the tenant can fix easily. I have many examples.

My management company doesn't have that minimum because of deferred maintenance and tenant neglect. I wish the tenants have some skin in the game when it comes to maintenance without imposing minimums.

George Nyquist · Answer

I will begin lobbying for the hiring of full time maintenance personnel. Thank you everybody.

George Nyquist · Answer

I should clarify what my role is in the company. I manage the development projects. I seldom concern myself with the landlord/tenant issues. This is me brainstorming for ideas on how to keep my guys working on development and not losing them to handyman projects. It sounds as if my home warranty idea may not the best path forward.

Please chime in if you believe you may have another possible solution.

Thank you BP community for the input.

Please chime in if you believe you may have another possible solution.

Thank you BP community for the input.

Can I require tenants to pay for a home warranty? Should I?

Can I require tenants to pay for a home warranty? Should I?

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