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VOLUME IIIRepairs: Who Pays for What?By Juliana Torres-MasonFor a landlord, a rental property is an uphill battle against mishaps, calamities, the hands of time and sometimes nature itself. To guard their investment, property owners must plan ahead, maneuver tactfully and sometimes be prepared to cut their losses.“The house is a handmade product,” said Joseph Ray Diosana, a Lead Associate Broker of Houston’s The Property Joes. “All it is is time and money. We try to get those costs minimized as much as possible.”Meanwhile tenants and landlords have rights as well as legal responsibilities when faced with a tricky repair bill on the rental property.The BasicsWhile the exact rules for property repairs vary across the country, landlords are always required to keep their units in a livable or habitable condition. Usually this involves making sure tenants have hot and cold water, and the unit is heated, structurally sound and free of pests. Texas state law, for example, states that a landlord must make repairs if the problem is “materially affecting the physical health or safety of the ordinary tenant.”Local ordinances will require landlords keep the property up to code, outlining requirements for the building’s electrical wiring and plumbing, as well as issues such as asbestos, lead and mold.Landlords can charge for the repair when the tenant is at fault. For example, if there’s a pest issue due to the tenant’s negligence in taking out the garbage, the landlord can pass on the extermination costs. However, property owners should plan on paying for repairs that involve the tenant’s safety and the regular wear and tear of the building.Wear and tear can vary from state to state. Florida statutes require landlords to repair any damage to screens once a year until the lease is terminated. But amenities like air conditioning are not required, which means wear and tear by tenants would be their responsibility (and theirs to keep).The Role of the LeaseThe first step in creating a smooth relationship with tenants is to set clear boundaries with a comprehensive lease that outlines the landlord’s repair policies. The lease agreement should give answers for potential gray areas, eliminating confusion from the beginning. It can give procedures for notifying the landlord of needed repairs or clarify a commitment to maintain the unit at a higher standard than the law requires, such as keeping a home air conditioned in Florida.Diosana said that he recommends landlords use the lease to define a threshold for how expensive repairs should be before the owner gets involved.“Landlords don’t want to change light bulbs,” he said. “There’s usually a minimum before the landlord goes out to a property.”That minimum should include context in the lease regarding repair deductibles. Tenants may be informed that they’re required to pay the first $100 for repairs. This not only prevents tenants from calling the landlord about minor issues, but it also may result in the tenant taking better care of the unit for at-fault issues.The lease also is the place where tenants should outline any damage that exists prior to their arrival. Diosana, who represents tenants as well, said that he makes sure his clients provide their landlords an inventory of everything that needs to be repaired within three days of moving in.When Diosana is working with property owners, the inventory provides the starting point for determining what repairs the tenants are responsible for as they move out.“If they don’t provide it, then we’re going to charge it,” Diosana said.The lease can state whether the landlord intends to make any repairs or updates to the property. Landlords can be held legally responsible for repairs they’ve promised to make within the lease.The Tenants’ ResponsibilitiesThe lease should include a list of maintenance needs that are the responsibility of the tenant, such as taking out the trash and regular lawn care. If the tenants are found to be in direct violation of their lease, any resulting damages fall to them.In most states, landlords aren’t responsible for any damage directly caused by the tenants or their guests—whether it’s in the lease or not. For example, the landlord could charge for a tenant’s cat tearing up a window screen or cigarette burns in the carpet of a smoke-free home.If a needed repair is the landlord’s responsibility, tenants are required to notify the landlord of the damage in a timely manner. Failure to do so might mean the repairs ultimately fall on the tenants’ shoulders, especially if the damages become worse as time goes on.In Texas, before a landlord is required to make any repairs, tenants must be current on their rent and report the problem to the person or place where they normally pay their rent.Potential Consequences to the LandlordWhen landlords are responsible for the repair, state and local laws will dictate the tenants’ options. These options may include legally breaking their lease and moving out, deducting the cost of the repair from monthly rent, withholding rental payments until repairs are made or suing the landlord. It’s important for landlords to know what their state laws allow and how much time they have to repair damages they’re responsible for.In Texas, state property law gives landlords seven days from the time they receive the notice as a “reasonable” timeframe for them to make the required repairs. However, the law allows for emergency repairs or the scarcity of required materials to change what is considered reasonable.If the repairs are not made, Texan tenants are allowed by law (Sec. 92.0561) to send a second notice notifying the landlord of their intention to deduct the cost of the repair from their rent. The deduction can total the cost of one month of rent or $500, whichever is greater. However, tenants may want to seek the advice of an attorney or tenant counselor, as deducting the cost of the repairs or terminating the lease early are both legally complicated.In Florida, landlords have seven days after a tenant provides written notice to start making the repairs if they are required to do so. After that, tenants can withhold rental payments until the landlord makes the repairs. Withholding rent is different from deducting the cost of repairs, however. Florida, and many other states, require tenants to pay the withheld rent as soon as the landlord repairs the damageIf the repairs aren’t made in a reasonable amount of time, Floridian tenants have the option of breaking the lease, moving out and keeping the withheld rent. Landlords should follow the law carefully to avoid fixable landlord-tenant repair disputes, and in turn, expensive legal fees.To Sue or Not to SueIf the tenants are legally at fault, holding them responsible may be more costly than the value of the repairs themselves. If a tenant refuses to pay for damages, landlords should consider options with a mind for what’s best—and most profitable—in the long run, Diosana said.“Legally, they can pursue it in small claims court,” he said. “However, what’s expedient, typically, is the best.”If tenants are leaving behind lots of damage, those repairs must be made before the property is leased again, regardless of whether the former tenants agree to pay for them. Because of this, Diosana often suggests that landlords offer to split the costs of the repairs, even if they’re not responsible for them. This allows them to recoup some of the costs, and avoid the time and legal fees associated with small claims court.If the repair is more extensive, Diosana usually advises his clients to make arrangements for the repair themselves.“At some point you just have to say, ‘OK, let’s just move forward,’” he said. “Because otherwise, you’re fighting, the tenant hasn’t moved out, and you have a property that’s not making money.”Making the RepairsThe first step in making necessary repairs is to assess the damage, Diosana said. Sometimes the fix is easy and can be done by the tenants themselves. A leaky faucet might be easily addressed with a new washer or plumbing tape.If the repair is more extensive, Diosana usually advises his clients to make arrangements for the repair themselves. Someone with the proper certification in plumbing, electrical work or air-conditioning repairs will ensure the job is done correctly. Allowing the tenants to hire someone themselves is a risk—and a botched job will cost the property owner more in the long run.To help with the inevitable cost of repairs, Diosana suggests that his clients take out a home warranty on their rental properties to “minimize the cost.”While property insurance covers repairs in the event of unexpected damage (ex. flood or a hurricane), a home warranty covers wear-and-tear repairs that landlords are responsible for.Home warranties are especially helpful if landlords don’t have a handyman or maintenance team with certified specialties on standby, Diosana added.In the end, making repairs is like any rule of real estate: Every problem is different and requires its own nuanced answer.“We could come up with a hard-nose rule for everything,” Diosana said. “But if it doesn’t resolve [the issue], then you have to make your best judgment.”