Tenant withholding rent because repairs took more than 24hrs

Tenant withholding rent because repairs took more than 24hrs

Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes

Hello BP family,

Thank you for all your inputs that have led me on the path of putting together these blocks towards a building of financial freedom. Here I am once again wanting to fetch from this well of knowledge.

I recently moved to Chicago and have acquired a 3 unit in the Bronzeville area. Things went smoothly for the most part and I was supposed to have inherited what the seller originally described as excellent tenants. I can say that they seemed to be this way for the most part.

I have now closed on the property and while reviewing the files I read some communication between the previous owner and one of the residents that may be cause for concern. They had decided to deduct from their rent two months prior to closing because apparently the owner took too long (48 hours) to fix the water heater which was not properly heating. The previous owner provided them with a letter explaining how there was a first technician on site to fix the issue the day after they reported it who could not resolve the issue. She ended up hiring a second tech who knew what he was doing and fixed the issue the next day. This is the municipal code that the tenant quoted that allows them to withhold rent:

5-12-110(f)(4)“Withhold from the monthly rent an amount that reasonably reflects the reduced value of the premises due to the material noncompliance or failure if the landlord fails to correct the condition within 24 hours after being notified by the tenant; provided, however, that no rent shall be withheld if the failure is due to the inability of the utility provider to provide service”

They ended up withholding 2 days of rent and would not reply to the previous owner’s correspondence afterwards. There was another incident after that where the same tenant supposedly locked himself into a garage and ended up damaging the door lock. The garage is currently provided to them as a convenience to store their items and the previous owner believes the lock was broken on purpose.

It just so happens that their lease ends in a little over 30 days and my original thought after getting through their files was NOT to renew their lease and ask them to vacate at the end of the lease as I wouldn’t want to have to deal with similar issues. However, I’m not sure if a non-renewal of lease would be considered as an eviction and would rather avoid the latter since that’s been postponed and I don’t want to enter a legal battle so soon, especially being new to the Chicago area. The other thought I have is to renew with a Month To Month lease and monitor their behavior so I wouldn’t have to try to fill a vacancy in these times and I believe the tenants are probably good people (teachers) that might have just hit a rough turn? Also have any of you had to deal with the code cited above?

Please advise! Thank you

0Reply
151 views

Most Popular Reply

Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
6y
Originally posted by @Curtis Mears:

@Wonderful Togbey

Based on no security, I would not renew and get a tenant with security deposit. Astounding how anyone rents without security deposit. Maybe those properties have zero value so no security needed, but i doubt it.

------------------------------------------

See this reply in the discussion

34 Replies

Jump to latestLatest
  • Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    If you're not sure if a non-renewal is an eviction, then get sure. Find out what state and local laws are mandating at this time and if there's an end to those restrictions on the horizon. 

    Get an attorney to verify whether the ordinance applies to your situation. In most cases, rent cannot be withheld, but it can be put into escrow. So you may still be able to go after them for non-payment. 

    Did the prior owner give you their security deposit? If so, you may be stuck with them until the eviction freeze is lifted. Then you can just keep their deposited for any unpaid rents and the lock damage. Good luck!

  • Investor · Londonderry, NH · Member since 2015 · 163 posts · 59 votes
    6y

    It's tough to say given the state of the COVID-19 crisis. I would have a conversation with the current tenants and discuss your side of the situation with them and also what your plan is to update the existing lease terms to potentially be a month to month. I do agree with Nicole, you should make sure you have the right people involved (attorney) to answer some of the legal questions before you have conversations with your tenants. All states have different laws so make sure you read up on your local laws as well before attempting to change anything.

    Good Luck!

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    Non-renewal is NOT the same as an eviction.  As for withholding rent because repairs weren't done in 24 hours, it seems silly to me as long as the house was habitable and you did your best to get someone in immediately.  That being said how much is 1-2 days' worth of rent? 

  • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
    6y

    @Nicole Heasley thank you for your insight. I’ll be sure to check with a lawyer.

    They didn’t pay a security deposit which is another thing I noticed was odd. My guess is the previous owner didn’t want to mess with it since you have to escrow it over here, and pay some type of interest... the 2 newest tenants didn’t pay a direct deposit.

  • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
    6y

    @Anthony Simboli thanks for your comment. I’m planning on having a conversation with them prior and hopefully get on the same page. I’m leaning more towards going MTM

  • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
    6y

    @Theresa Harris I thought it was silly too and a bit mean actually because the previous owner mentioned how she waved the late rent fee a couple of times for them and even gave them a discount on the rent at move-in, 1075 instead of 1200 for a 2bed 1ba in this area. 2 days worth of rent was about $75

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y
    Originally posted by @Wonderful Togbey:

    @Theresa Harris I thought it was silly too and a bit mean actually because the previous owner mentioned how she waved the late rent fee a couple of times for them and even gave them a discount on the rent at move-in, 1075 instead of 1200 for a 2bed 1ba in this area. 2 days worth of rent was about $75

     With some tenants, you give them a break and they want more or take advantage.  If you do renew their lease, I'd be strict with the late fees and wouldn't give them any discounts.

  • Chicago, IL · Member since 2017 · 175 posts · 86 votes
    6y

    I agree with Anthony that you have to be very careful right now with covid 19. A lot of ordinances have been proposed in Chicago.  

    Also even if you are MTM you still need a lot of written documentation per RLTO - might be easier to make them sign MTM lease. I would check with your lawyer on what is required


    In my experience tenants who care about getting things fixed in a timely manner are keepers.  I would be more than happy to credit them 2 days.   i would be more concerned if they told you about heater on the first and said they weren't paying. 

  • Chicago, IL · Member since 2017 · 175 posts · 86 votes
    6y

    (j)Notice of Refusal to Renew Rental Agreement. Provided that the landlord has not exercised, or is not in the process of exercising, any of on 5-12-130 (a) — (h) hereof, the landlord shall notify the tenant in writing at least thirty (30) days prior to the stated termination date of the rental agreement of the landlord’s intent either to terminate a month to month tenancy or not to renew an existing rental agreement. If the landlord fails to give the required written notice, the tenant may remain in the dwelling unit for up to sixty (60) days after the date on which such required written notice is given to the tenant, regardless of the termination date specified in the existing rental agreement. During such occupancy, the terms and conditions of the tenancy (including, without limitation, the rental rate) shall be the same as the terms and conditions during the month of tenancy immediately preceding the notice; provided, however, that if rent was waived or abated in the preceding month or months as part of the original rental agreement, the rental amount during such sixty (60) day period shall be at the rate established on the last date that a full rent payment was made.

  • Chicago, IL · Member since 2017 · 175 posts · 86 votes
    6y

    Also,  just thought of this: even if non renewal is not eviction, they still will need to be evicted if they don't leave.  You might put yourself in a situation with an angry tenant refusing to pay rent and waiting for eviction moratorium to be lifted

  • Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
    6y

    @Wonderful Togbey do you have estoppel letters where the tenant certifies they don’t have a deposit? What happens if they claim the landlord took one? The withholding for 24 hours was ridiculous, but who knows what went on before that between the parties.

  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    6y

    If you will have them stay I would add a security deposit and explain that is policy for you. Alternately since you are in Chicago some now collect a move in fee instead of a deposit or use some sort of security deposit insurance (e.g. Rhino). For your area they might be good options.  I would also put in the lease late fees will become additional rent if it is allowed in your area. Make it clear you will charge late fees.  I would do a move in checklist on the apartment now since  it is thought they maybe concealed breaking the lock you want a status of everything now.  If you have a checklist already go over it and resign.    Because of the late rent, no security deposit, and rent deduction I would go month to month.  Keep in mind teachers often supplement their income with summer employment which may be harder this summer. 

    You have to get some legal clarity on that ordinance because you know they will use it again. Guaranteed, so you need to know what it applies to.  Hope that helps.

  • South Holland, IL · Member since 2017 · 376 posts · 432 votes
    6y

    @Wonderful Togbey

    I’m a Chicago investor and I too live in Bronzeville. A non-renewal of the lease would have the same end result of an eviction at this time of ‘moratorium on evictions.’ If the tenant refuses to honor the 30 days notice, you are essentially in the same position (and the tenant may even stop paying!). I would renew the lease on a month to month term and inform the tenant that it’s because you both are entering a new arrangement and the new agreement allows for both parties to exit the agreement with ease.

    That way the tenant is not alerted to your concerns about their possible pettiness and you continue to receive rent. Once the moratorium is lifted, you can evaluate whether this is a tenant you want on a long term lease.

  • Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes
    6y

    @Wonderful Togbey

    Based on no security, I would not renew and get a tenant with security deposit. Astounding how anyone rents without security deposit. Maybe those properties have zero value so no security needed, but i doubt it.

  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y

    @Wonderful Togbey your logic is steering you the right direction here. Non renewal is not eviction, but if they refuse to leave, it can turn into eviction. Even if evictions are allowed, many courts are not currently hearing the cases or they are taking longer. I would renew on a month-to-month basis. Watch what happens and give them non-renewal if they cause trouble. As far as deposit, that ship has sailed.

  • Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    6y

    @Wonderful Togbey a lot of people on here are giving well intentioned advice, but remember that real estate is local. You shouldn't be collecting a security deposit right now in Chicago as the tenants can take you to the cleaners if you mess up how it is handled. All of the big players in the management space will NOT collect a deposit due to the way the law is structured. 

    As to whether a non renewal equals an eviction, it absolutely is not the same thing. You can not renew a bad tenant and in theory they should just move out. Of course, theory and reality are very different. As others have referenced, if they do not move out when the end of their lease arrives then you will be in a tough spot. This is where soft skills matter. Figure out a reason why you need the unit back that has nothing to do with this issue. Do you need to renovate? Fix code issues? Your mom needs a place? Find some human reason that makes sense and don't address the face that they might be PITA tenants. 

    You want to keep good will with your tenants as long as possible. Once the goodwill is gone, it starts costing you money in eviction court (which isn't an option now anyways). 

  • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
    6y

    @Connor O'Brien

    Thanks for your insight on tenants who actually report issues. It can be dreadful to get those calls but definitely better than having things go bad and not know about them. MTM seems to be my safest option at this point. Very helpful points!

  • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
    6y

    @Jonathan R McLaughlin I do not have such a letter but I have the previous lease that they signed which indicates no deposit was paid. Hopefully this is enough. One more thing I’ll need to check with the lawyer

  • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
    6y

    @John Warren thanks a ton! I’ve definitely notice the trend for landlords not to charge a deposit in the Chicago (the few I’ve seen). I believe the move-in fee as mentioned by @Colleen might be the way to go on future tenants. Thoughts on that?

  • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
    6y

    @Quincy Lockett thanks a lot for your insight. I would love to connect.

    Like others have advised MTM is going to be my route at the moment. I might use that opportunity for a slight increase as well. $1075 for a 2bed 1 ba, AC in unit and washer and dryer on site seems much low compared to what I’m seeing in the area.

  • Brian LucierPro Member
    Property Manager · Fitchburg, MA · Member since 2012 · 148 posts · 201 votes
    6y

    @Wonderful Togbey

    Welcome to becoming a Landlord! 

    A lot of good advice thus far on the post especially from your local landlord ppl. I personally do not like it when residents start to recite building and sanitary code enforcement to me. For me that is the beginning of the end and I am already looking ahead planning to give them a new mailing address at a property I do not own. Unfortunately, all plans are on hold until further covid notice.

    Just like in business, hire slow - fire fast.

    Ok, so that is my "personal" opinion. Now, as a business, how to deal with stellar customer service? I still do not like that they are pulling this malarkey to withhold rents and quoting code. In Massachusetts the law hinges on the words "reasonable efforts" to make repairs. 

    So if you called the plumber right away and they are booked, or needed to order parts, or some other issue causing a delay - then you are within your zone of taking reasonable action within the interpretation of the law. I believe it is your reasonable responsibility to provide an "implied warranty of habitability" from the moment the ink dries on the contract. That means if your lease says YOU provide the hot water, then YOU provide the hot water and fix it when it breaks. 

    Maybe a way to turn this around to a positive is to offer them a concession up front when this happens? If you think it is going to take two days to get fixed, and it the prorate per diem rent is $75 dollars a day then try this. If it's going to cost you anyways because now they know to ask for it, negotiate the discount up front as soon as they call. Instead of $150 dollars for 2 days, maybe offer $50 per day the system is down. Something like that could save you more if the delay goes on even longer. And if they initially agreed to that amount, then you are both in agreement with the prorated discount.

    We also have to deal with "reasonable accommodation" in MA. This past winter we had a few boilers go down. Same type of issue. We worked with the residents right up front. We apologized for the inconvenience, got them space heaters immediately to get them through the repairs, and offered to put them in a hotel. They were touched by our response and ended up roughing it out in place with the space heaters. The space heaters also ended up protecting our property from frozen pipes. The gesture was taken well by the resident but it was also self serving to protect the property too.

    Just as it goes with many post in here, there are some gray areas and a lot of moving parts. There never seems to be any one set of rules to follow when things go wrong. People are an interesting dynamic in all repairs. Not saying you did or intended to do anything wrong, but it always helps me when I weigh out the pros and cons. In time, you get really quick at this and come up with creative solutions to issues on the spot while dancing around the landmines. It's kinda fun!

    • I do not like residents reciting code to me PERIOD
    • If it breaks on you, you fix it - make all reasonable efforts
    • Communicating with residents and a little compassion go a long way during a crisis
    • If you decide not to keep said resident, start planning now for better days ahead
    • If you decide to renew, make it on your terms, there is a "new sheriff in town"
    • Know your market as far as asking for first, last, security, move in fees, etc.
    • Offering a little upfront now may prevent them asking for a lot later
    • Know your state code: tenant/landlord, building, fire, board of health
    • ALWAYS have a plan

    At the end of the day having to pay $100 bucks to keep residents happy may be worth it. Happy residents pay rent! And YES, totally ENFORCE all late fees, penalties, and charges. Explain to the resident this is the "company policy" and I have to do it this way or I get in trouble. 

    Truly hope this helps. 

    • Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
      6y
      Originally posted by @Curtis Mears:

      @Wonderful Togbey

      Based on no security, I would not renew and get a tenant with security deposit. Astounding how anyone rents without security deposit. Maybe those properties have zero value so no security needed, but i doubt it.

      ------------------------------------------

    • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
      6y

      @Brian Lucier I really appreciate all your tips. From what I’ve learned so far if a tenant is looking for a reason to screw you, they’ll find one, but using compassion and emotional intelligence as a landlord goes a long way!

    • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
      6y

      @Eric M. I’m finding out Chicago is definitely a different beast. I hope I won’t have to constantly feel like I’m walking on eggshells around residents since the laws appear to be biased in their favor.

      Do you do move-in fees instead then? Is it a certain percentage of your rent?

    • Rental Property Investor · Chicago, IL · Member since 2018 · 28 posts · 11 votes
      6y

      @Connor O'Brien @Quincy Lockett @Eric M. first timer question...

      I found the lease from CRTLO in the files (thanks to @Brie Schmidt for sharing that)... can the same one be used for a MTM lease? Would I just end date it 30 days from the start date or is there another special lease to be used. (The ones I’ve used outside of IL normally have a checkbox for MTM vs Yearly). Thanks again... just ensuring I’m doing everything right

      Also Late Fee: $10 plus 5% of (the rent amount- $500) Is this the standard that you follow? So $35 if the rent is $1000

    Join the conversationCreate a free account to reply, vote on answers and follow this thread.