When buying a property with already in place leases. Is it legal to add charges to residents accounts ?

 

I’m asking for clarification. My assumption is that it’s not legal, because those charges are not in the lease.

But idk if there’s some rule/law I don’t know about.

In Alabama You can add an addendum at renewal but cannot change mid lease.

You can definitely change things during the lease by giving proper written notice. Most states don’t allow you to change the monthly rent but it does allow for new recurring charges, along with changes to any existing community policies and procedures.

Depends on the state. In my state you can amend with 30 days written notice for items like this and others it’s at lease expiration.

This is in Georgia if that helps

Definitely allowed in GA with 30 day notice. You may want to implement the changes 60-90 days out to avoid push back from the residents. Most aren’t concerned with an extra fee less than $50. But more than that will definitely result in some unhappy people.

The best advise is to contact your legal counsel for your community. Your state & local laws may differ from others on this subject. Most times you can not make changes to the lease agreement until it expires and you have issued a 30 days notice of these changes. I have heard of leases with addendums that allow for increases in water/sewer & trash fees if the local government increases their utility.

FL you have to wait for renewal to add to the lease

That actually sounds super shady. The ethical thing to do is implement any new charge(s) with new and renewed leases!!!

In Colorado you have to give a 30 day notice of a rent increase. I took over a property and every renewal or new lease we disclosed we would begin adding charges for. Common area maintenance and that we would charge back real estate taxes. Everyone’s utilities doubled. They hated me.

In CA we served a 60 day change in terms. It’s perfectly legal if you do it correctly. You serve the change in terms when you send out the renewals and to all on MTM leases. So it takes a year to get everyone on board. Unless you are all MTM or if all of your leases expire within a period less than 12 months

Each state differs, suggest checking that states main RE office.

No you cannot add additional charges. However, you can notify all existing leaseholders in writing and start the charges 60 days later. You can’t change the monthly rent amount until renewal but you can add recurring charges like pest control, trash disposal, etc. Just need to review the lease and your local laws - most states are 30 days but I’ve stuck to the 60 days to allow the residents additional time to adjust their budget.

When we took over from another property management company, we honored their current signed lease. We changed utility companies and they were given a 30 day notice. When their leases expired and we sent them their renewal offers any new charges we added, we made sure those were included and they were aware. If they didn’t agree, they gave notice.

No, you'd have to wait until their renewal to increase water/trash, etc.

Depends on how the lease and additional charge addendums are written. Rental rates very likely no in most states possibly though other charges. Not a good way though to make friends right off the bat

Even of you can don't! Wait until lease expirations or you might have a revolt on your hands!

Know the lease that is in effect, might be different from what used to also know your jurisdiction. Might be best to ask tour legal local counsel.

We normally will add the new charges to renewals and move ins as normal practice would like to be cautious as we find the skeletons which might have been left behind during transition. Found it to not be worth it to add that stress to onsite teams with all the transition going on as well

Sounds like an awesome first impression to the residents... legal or not you should wait until renewal

I'd read the lease and check your local/state laws. In all likelihood will not fly unless per the lease, contract is null and void with a property sale and notices were given out prior. If that's the case, you risk an exodus. I've never seen that in takeovers, typically all lease contracts are assumed.

If you’re wanting lease renewals, I highly recommend you come in as calm as you possibly can and wait until lease renewal time. In Indiana, you must follow the lease in place but either way, if you want those people to renew, now is not the time. I highly recommend, you get to know your residence, try to prove you are the latest and greatest management company, and then when they see you are taking good care of them, they will want to renew and they won’t be as mad about extra stuff.

Thank you everyone for the feedback and knowledge.

Unfortunately this isn’t my decision- It’s corporates. So I’m sure y’all can relate. But I just wanted to make see if this was at least possible. Even though there will be tons of blow back…

Completely understand both your position and corporate’s. Your at the site level so it’s your job to sell these changes to the current residents in a positive way. Creativity is your best friend right now as you’ll need to add value in order to avoid an uproar. But I’ve done this plenty of times (I managed properties in GA for 10 years and saw plenty of ownership/management changes). Feel free to DM me if you need help! As I said in previous comments, advance notice makes it easier. Plan to spend some one on one time with the angry residents as well. I actually encouraged them to schedule an appointment so I could give them an hour of my time without interruption.

No. You cannot change a bargain that has already been made and codified in the lease. But good for you going for the ancillary increases! Let me know if you’d like to discuss how you can improve pet revenues in the neighborhood of 30% at no cost to you. Oh… and we do all of the Assistance Animal Accommodations for you as well.