Landlord or Tenant, who’s right on this?

[NicMM]

The rental property I bought last year had HOA fee $280 per month. The HOA fee included water and sewage when I bought it. When I rented the property out, I put it in the leasing agreement that “water is included” in the rent, as a matter of fact at the time.

Recently the HOA put submeter on each unit and owners have to pay water bills based on each unit’s water use. It is a way for HOA to raise fees on the owners as the HOA due remain the same. I think the tenants should pay the water bill, since it’s their use of water. But the tenants refuse to pay, citing the leasing agreement. Who is right on this?

NicMM

[scaredyclassic]

they’re using the whole rental unit, why shouldn’t they have to pay for repairs or general wear and tear?

[moneymaker]

I would have to side with the tenants. Just one more reason I hate HOA’s

[ocrenter]

Agree with tenants, it is written in the lease agreement.

[HLS]

If the HOA had raised your monthly fee instead of adding submeters do you think that you would be entitled to raise the rent for that reason alone ? (answer is NO unless it was in the lease)

What part of “water is included in the rent” that you put in to the rental agreement is confusing ?

It sounds like you bought a condo as a rental property, which is the worst type of property anyone can buy as a rental, and an even worse decision for a first time investor.

I can almost guarantee you that your monthly fee will never go down, and it will not stay the same, it will only go up.

Wait until you get a $500 or $1000 assessment for an HOA deficiency that you cannot dispute.
You cannot pass these on to your tenant.

HOA’s are ticking time bombs, often run by inexperienced people who think they know what they are doing, but really don’t.

If they had not done the submeters, they would have raised your monthly fee.

ALL HOA’s need money to maintain the complex and reserves and there are only a small group of people who MUST pay that money.

[SD Realtor]

This is a no brainer.

What you put in the lease is what you have to abide by. If you wrote in the lease that the tenants do not have to pay for water, then they do not have to pay for water.

It is your responsibility. In your next lease you should safeguard yourself better so that if there is another bill that you presumed will be covered by the HOA then you will need to write it in the lease that if the HOA fails to cover that payment, then it will be the tenants responsibility.

It is not fair for you as a landlord to impose fees upon the tenants that you did not agree to in writing and identify in the lease.

[Coronita]

tenant. It’s in the contract

[(former)FormerSanDiegan]

Clearly the tenant is right. Just wanted to chime in in case you are counting votes.

[sdduuuude]

Some leases roll over to a monthly contract after a certain term.

If you are still in the original lease period, there is likely nothing you can do because it is in the lease.

If it has rolled over to a monthly agreement, though, then you can forge a new lease with new terms.

[briansd1]

Tenant. If I were the tenant, I wouldn’t pay either.

[bearishgurl]

[quote=HLS]If the HOA had raised your monthly fee instead of adding submeters do you think that you would be entitled to raise the rent for that reason alone ? (answer is NO unless it was in the lease)

What part of “water is included in the rent” that you put in to the rental agreement is confusing ?

It sounds like you bought a condo as a rental property, which is the worst type of property anyone can buy as a rental, and an even worse decision for a first time investor.

I can almost guarantee you that your monthly fee will never go down, and it will not stay the same, it will only go up.

Wait until you get a $500 or $1000 assessment for an HOA deficiency that you cannot dispute.
You cannot pass these on to your tenant.

HOA’s are ticking time bombs, often run by inexperienced people who think they know what they are doing, but really don’t.

If they had not done the submeters, they would have raised your monthly fee.

ALL HOA’s need money to maintain the complex and reserves and there are only a small group of people who MUST pay that money.[/quote]

Again, excellent post, HLS. I wanted to add that a condo owner can be subject to special assessments at the whim of a majority vote of its’ assn’s board members. For example, the Board might think the roof needs replacement (maybe it does and maybe it only needs repair). They could levy a $3K to $7K assessment for each condo owner … yes, even if it is a multi-story complex (NOT a “townhome” where each unit has its own roof). They are more likely to do this for a needed expensive repair/replacement if they have many (uncollectable) small claims’ judgments for delinquent dues and they don’t wish to foreclose their liens.

Unfortunately, most people who buy condos do so because the price “seems” better than a SFR and do not and will never have the money to pay a “potential special assessment” sitting in their bank accounts with 60-90 days notice.

Liens are placed by a condo assn on units in which those special assessments are not paid. Assns do NOT have to get a court judgment to place these liens! They can simply specially-assess the units within the assn and wait a period of time to be paid by the owner before filing a lien for nonpayment. As these liens sit filed for years unpaid and unreleased, their face value accrues 10% per annum interest.

Slightly OT: The ROI is NOT better on lower-priced condo-rental investments vs lower-priced SFR rental investments, nor do they necessarily have less closing costs, IMO. I think the reason they are preferred by some for rental investments (over SFR’s) is because most SFR’s in the same price range as a nearby condo need a little work on them before placing tenants in them at optimal market rent. Putting $2 to $8K into a recently purchased rental SFR and doing most or all the work yourself in order to place a market-rate tenant in it is a far wiser decision than buying a condo, IMHO. Those who have claimed it takes $25-$40K to fix up a <1600 sf rental house for future tenancy are quoting from what THEY would prefer it have if THEY lived in it. All tenants know what they can rent for their price point and preferred location. What tenants are used to for their rental price range and what owners prefer to live in are often two different animals.

Obviously, if a potential investor only wants to invest in "professional white-collar areas," then he/she will likely not be able to get an ROI on a SFR in those areas. Those owners who have a portfolio of well-acquired rental houses in working class and retired areas are the ones whose net worth will continue to increase in the long haul throughout their working and retirement years, IMHO.

[Coronita]

Landlords hate tenants that are nitpickers when it comes to money/repairs/inicidentals… The same could be said for tenants view on landlords.

You really need to ask yourself even when the contract comes due, whether the water bill (if it’s small, since it’s just a condo) is really worth arguing over IF you’re going to have a problem finding the next tenant and have a break in your lease.

If at all, in your next contract, have it water included up to X, and beyond X you’re responsible for it Mr/Ms. Tenant if you’re planning to keep the tenant.

Consider rentability of your current condo, rental lapse, and current rent rate in your area imho.

[carlsbadworker]

It is your contract. You are the one who came up with it. And now you decide to break it for your financial convenience? I don’t think there is a judge who would not side with the tenants in this case.

[sdsurfer]

[quote=HLS]

It sounds like you bought a condo as a rental property, which is the worst type of property anyone can buy as a rental, and an even worse decision for a first time investor.

I can almost guarantee you that your monthly fee will never go down, and it will not stay the same, it will only go up.

Wait until you get a $500 or $1000 assessment for an HOA deficiency that you cannot dispute.
You cannot pass these on to your tenant.

HOA’s are ticking time bombs, often run by inexperienced people who think they know what they are doing, but really don’t.

If they had not done the submeters, they would have raised your monthly fee.

ALL HOA’s need money to maintain the complex and reserves and there are only a small group of people who MUST pay that money.[/quote]

I’m not sure if I should start a new topic on this, but I was kind of intrigued by this post and thought I’d open it up for a bit more discussion if others are open to it. I guess you could say I’m threadjacking, but I feel like the initial topic has already been put to rest that the tenant is right per the lease.

Yes…I just bought a condo as an investment in Encinitas and am confident in my decision, but I’m glad to open it up for others to prove me wrong as a learning lesson for myself and possibly others.

Worst investement? Even if it cash flows and is in a great area where the rents tend to stay high and most people do not ever want to leave?

Monthly fee will never go down…I know that, but would’nt rent go up…increasing my cash flow or increasing my own reserves toward future mainteinance of the property?

Special Assessment…would’nt that be a write off?

Ticking time bombs…Are they all inexperienced? I’ll agree that some boards are sub-par, but I believe 4 out of 5 board members in the community I’m thinking of live in the community and have for over 10 years. I would think that qualifies them.

Only a small group to pay the fees…would’nt spreading the cost of a new roof over a number or owners be better than having to pay the entire expense yourself?

I really just like the idea of critically thinking for yourself to make your own decisions as opposed to always following others or making sweeping generalizations that may or may not be true in all cases. Of course there is risk in all investment decisions and you do your best to minimize the risk, but you cannot eliminate it. You do the best with the knowledge you have within your means.

I do think that HLS had a great post and know he’s been a pigg much longer than me so I’m not calling anyone out here. I just thought it might be a good housing related discussion. I also like the OP that bought a condo could have made a good investment or could have made a bad one depending on their situation and how the cards fall in the future. Whether or not they did has nothing to do wtih this water bill issue. I think the HOA did what they had to do and it was a much better decision than raising the HOA fees because you can ration your water. I also think that not all HOA’s are bad. I think it is a very thankless job and the salary is $0 which does not necessarily attract the best applicants, but I think a lot of them do their best and a lot probably do a good job. I also feel like there is an aspect of a rental in an HOA where there are rules that need to be followed and the landlord has someone else to enforce them for them…which could be a good thing right?

Maybe I’ll regret chiming in, but maybe I’ll learn something that helps me or others down the road. I think we’re all on this blog right now to learn from everyone else right?

I appreciate anyone that might care to share their thoughts and experiences.

[(former)FormerSanDiegan]

sdsurfer – I think that’s a great idea for a new thread. I’ve never owned a condo (as a rental or primary), but have owned two different SFRs that we held as rentals (still have one of them).

My main concern for avoiding condos is control. For the house, we can defer maintenance to soem extent and do remodeling or upgrades as we see fit over time. We are the decision-makers. In a condo, I am afraid of losing control over portions of the finances with regard to the proprty maintenance and repairs.

I guess if there were a situaiton which results in a premium in terms of rent, relative to the costs for the property it might be enough to overcome this (maybe a beach rental or a highly sought after address) but I don’t think condos generally command the rent premium overt a similar priced house to make up the difference in HOAs and lack of control.

[Author]

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