Washington, DC · Member since 2018 · 65 posts · 35 votes
Hi all!
I need some advice. This has never happened to me before and I'm not sure how to handle it. When I went today to have my current tenants sign another one-year lease, I did an inspection of the property. To my surprise, they built a kitchen (electric stove, sink and refrigerator) in the downstairs wash room.
When I asked where the washer and dryer was, he said upstairs. They had redirected the plumbing and electrical and installed the washer and dryer upstairs!!
Now, I'm no dummy. Clearly, if you are installing a kitchen/kitchenette in the basement you have plans to move someone in (not on the lease). That's actually the least of my concerns. I'm concerned that if something happens to the property (electrical fire, flooding, ...) as a result of these new installations, I will be left S.O.L.
What are my steps to protect myself and my property? I'm thinking step one is to get someone out to ensure the work is up to code AT THEIR EXPENSE...Please help!
*Also, I don't want to evict them because I'm getting top rent for the area and they always pay on time...through covid and all...
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
At this point you should get it inspected to make sure it is to code.
If it meets code you could leave it this way till they move. Then have them restore it they way it was using a licensed contractor or accept it they way it is.
If it doesn't meet code you can have them pay a licensed contractor to make it to code or have them restore it immediately to the way it was.
A tenant that takes care of the house and pays market rent on time is worth trying to keep.
So get it inspected and then decide which way to go.
I'd let them know you are going to step up inpections. This way you'll know if they try and move someone in that is not on the lease.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
6y
So to do this they had to run another 220 line for the dryer to the second floor? You have to get that inspected. All the electric wiring that was done and plumbing. In addition this might not even be allowed in your area to have this kitchen. In our area the building inspector would have you pull the stove.
I would arrange inspection and issue a cure or quit. Have an electrician in to decommission the stove outlet. Did they devalue the house by putting the washer dryer in a bedroom or similar? The main problem is that they viewed this as something they could do without consulting you. This means that they view the property as something they can just modify. If you let them stay you need to modify this view. Believe me this isn't the sign of a good tenant. Had they consulted you first ok, but modifying something this significantly that they don't own.
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Tomiko Graves - These situations always suck. One of the key things to do here is to keep calm and avoid creating any enemies. Explain that they broke the rules and why those rules exist. Explain to them that it's YOUR property and YOU don't want a second kitchen in there. I would then require them to remove it at their expense, and then I'd verify it was done (at their expense).
Put everything in writing and give them a time limit and a fee if it's not done in time. Explain that you'll send in someone to do it (which you'll charge them for) and it'll be much more expensive than if they did it themselves.
re your concern about flooding or electrical fire - your insurance would cover those loses.... but other than that I agree with the others, get work inspected then decide what to do. Oh and fwiw I immediately thought “airbnb” ......
I thought the same thing Mary. My guess is they are using the "AirBNB Rental Arbitrage" strategy. They can probably make more money than they pay in rent, so they think they have the perfect plan. The problem is standard insurance does not cover AirBNB and most likely their renovation work was not done with permits. This is a lawsuit waiting to happen and once the owner knows about it, they need to take action. You become liable for any risk you are aware of.
It sucks, but the best solution here is to issue a lease violation and give them 30 days to return to original condition with reinspection date identified. I would also remind them in writing that subletting, including short term rentals, is not allowed per your lease. If they try to argue, just tell them you were not born yesterday. The only reason for doing what they did is for some type of sublet situation.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
@Tomiko Graves. Do NOT take any expenses out of their damage deposit, as somebody suggested. You never use the damage deposit for expenses while the tenant still lives there. Never. What are you going to use for repairs and expenses when they move out? You bill them for any expenses incurred as a result of this.
Rental Property Investor · Souderton, PA · Member since 2020 · 124 posts · 106 votes
6y
@Tomiko Graves
I see an opportunity!
After you get it inspected assuming everything’s done right... Although they went behind your back to do this they seem like entrepreneurs also. This wasn’t a cheap update so they invested to make more money/offset rent. See if maybe you can build a relationship/ partnership with them. Give the option to pay a higher rent since they are probably planning on renting out themselves. Change your lease to protect yourself with them subletting.
If they don’t agree to pay more I’d start the eviction process.
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
6y
This is one of the craziest things I've ever heard. Who does that??! I totally agree with @Bill Hampton. You need to get rid of this tenant because they don't respect the terms of your lease AND they could be setting you up for a lot of expense and a lot of liability. You now have unpermitted plumbing and electrical work in your home. If it had to be re-done, it's doubtful you have enough money in their security deposit to cover it. Get it inspected, get them to cover as much of the cost as possible - use the security deposit to cover the cost of the inspection at the very least - and then hopefully you can move forward without too much cost to yourself. You may want to be prepared to get an attorney involved because they might want to be "reimbursed" for their expenses or want their "property" back (i.e. kitchen appliances.) Best case scenario, they just leave and if the work was done well, you could have a duplex now - if your city allows multi-family in that location. Good luck to you - you'll have to post a follow up so we know how this turns out.
@Tomiko Graves. Do NOT take any expenses out of their damage deposit, as somebody suggested. You never use the damage deposit for expenses while the tenant still lives there. Never. What are you going to use for repairs and expenses when they move out? You bill them for any expenses incurred as a result of this.
I was reading through the responses hoping someone would make this point lol!!! I could not imagine a situation where I would agree that!
Rental Property Investor · 95660 · Member since 2018 · 46 posts · 17 votes
6y
Wow, this is a new one. Have they been a tenant long? What are they doing with the downstairs? Are they moving in a family member? doing Air Bnb? Based on what they are doing you can decide what to do. Having the work inspected is a good idea regardless of what you do. A family member would be of less risk then AirBnb. I would up the rent a bit to help you with expenses when they move. I like the advice you have received on quarterly inspections, stern letter warning of eviction if any changes are made. If they are trying to move is a collage student or a family member I would feel very differently than AirBnB. Nothing wrong with the AirBnb concept with prior approval of the owner and they failed to do that. Is it in an easy place to rent out? What will the eviction costs be? Good luck and keep us posted.
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
6y
@Mary M. Not sure insurance would cover anything...? It’s unauthorized work and almost certainly unpermitted and I bet there is a clause in there saying “nuh, huh” and even if they covered your original structure can’t imagine they would cover the interior changes or restoration back
Investor · Raleigh, NC · Member since 2019 · 433 posts · 743 votes
6y
Trying to think creatively on this - Now that there is a kitchen there, does it mean there are two kitchens total? is it possible to convert this house into a duplex?
After you get it inspected assuming everything’s done right... Although they went behind your back to do this they seem like entrepreneurs also. This wasn’t a cheap update so they invested to make more money/offset rent. See if maybe you can build a relationship/ partnership with them. Give the option to pay a higher rent since they are probably planning on renting out themselves. Change your lease to protect yourself with them subletting.
If they don’t agree to pay more I’d start the eviction process.
Good luck!!
I am all about finding opportunities, but I think it is a bad idea to partner with people who go behind your back, violate a contract and don't follow permit or zoning laws. They have no common sense and can't be trusted. As far as changing the lease to protect her for subleasing - it doesn't really work that way. When you allow subletting, you give up rights to select a tenant, but you keep all the risk at the property. If the property burns to the ground due to an unpermitted kitchen and unpermitted living space, the insurance company can refuse the claim.
Trying to think creatively on this - Now that there is a kitchen there, does it mean there are two kitchens total? is it possible to convert this house into a duplex?
They most likely need a zoning variance, need to get the work permitted / inspected and need to make sure the space meets egress requirements. There is probably other problems too like shared utilities, shared HVAC ventilation, mail delivery, parking, etc. It is possible, but it takes more than a second kitchen to make a duplex.
Investor · Los Angeles, CA · Member since 2012 · 108 posts · 23 votes
6y
Ok look at it this way. Does your lease with them allow them to sub lease? Is there going to be a new person added to the lease, or they are going to lease it out without your approve. There is a Major problem with this, is if the sublease/ unauthorized person moving into the basement any injure will fall to you. Any damage to property that is beyond the amount of deposit will be a problem to get because "it's not your tenant." You can go after your current tenant, but that will cost money and court time which will it be worth it?
So the major problem is Liability here. If there is a fire, from basement, due to unauthorized dwelling, will your insurance pay for it also?
You can bite the bullet here, and the final decision comes from you.
For me, it's cure or evict. I bought single family because I want to deal with single family, if I want to deal with multifamily headache, I would gone and bought that.
So main point is your Liability vs Reward worth it or not.
North of Houston · Member since 2018 · 349 posts · 181 votes
6y
You now have heard how a whole nation of landlords think.. believe me when I tell you the exact opposite will be in your tenants mind. They will think you should and will be grateful and owe them big time.
Rental Property Investor · Rohnert Park, CA · Member since 2014 · 306 posts · 160 votes
6y
@Vicky L.
That is what I was thinking. In order for the county to authorize permits, they need to see behind the walls to see that work that was done correctly. So the tenant will need to tear off the drywall at their own expense.
And there are codes in some counties that don’t allow more than a certain amount of bathrooms/ bedrooms in a house because they wouldn’t conform to sewage codes.
And there are egress codes for window sizes to allow for people to escape in a fire. Did they change the window sizes at all?
Or if the inspector notices other things that aren’t up to code while he is there inspecting the electrical and plumbing updates, he can request additional things to be updated as well.
I didn’t read these all but, regardless of your path forward, protect yourself as best as possible for collecting damages when the city shuts this new unit down. Lawyer.
After that, analyze your system. Somewhere there is a repair to be made wrt inspecting properties to ensure all is well.
Brusly, LA · Member since 2017 · 44 posts · 36 votes
6y
@Tomiko Graves I'm writing to inject a little humor into your situation but the more I think about it the more I think this may work to your advantage. Once you have had the work inspected and it is determined to be proper, and the stern warning issued, since it is time to renew the lease you could thank them for improving your property and announce that a property with two kitchens rents for $_____ more than a property with one kitchen, thefore the monthly rent is going to be increased by that much going forward. Let them know you won't charge extra for the more convenient washer and dryer location. 😉 in all seriousness you have received some excellent advice and I believe you came to the right place for that. Even those of us not in your situation benefit by you sharing your experience. You can likely take a mixture of the advice here and apply it to your situation with confidence that it will work out well. I wish you the best and hope to read your resolution soon.
Involving the township is a bad idea. They are going to tear you apart for this.
I would ask your tenants for the permit for the work, when they can’t provide one, ask them nicely to put it back the way it was, because it’s now an insurance liability and you can’t have them live in the house with this work done
Washington, DC · Member since 2018 · 65 posts · 35 votes
6y
Wow. Thanks for all the suggestions and input! After careful consideration, here's what I did:
I called and sent a follow-up email stating:
1) Restoration has to happen by Oct. 17 (2.5 weeks from now)
2) Inspector (of my choosing) has to come out once restoration occurs (at their expense)
3) Quarterly inspections will start (Feb, May and Aug)
I decided NOT to evict as long as restoration is done by Oct. 17. I let them know that the violation warrants termination but because of .... I'm letting them stay. I did say that if anything like this happens again, the lease will be terminated.
Sacramento, CA · Member since 2019 · 18 posts · 8 votes
6y
@Josh Stevens I agree. There is almost almost always something that needs fixing when a tenant leaves the property. Plus that security deposit is a great motivator for some tenants to clean up really well and fix damage before they leave. If it’s already gone, so is that motivation.