7 Key Things That Most Renters Don’t Know

A lease or rental agreement contains what renters can and cannot do while living on the property. Unfortunately, some details slip through the cracks, and some terms are too vague to understand until a real problem arises. Much like home sellers not understanding the sales process or average real estate commission and other selling factors, renters too should make sure they are up to speed on the renting process. 

If you want to avoid legal trouble or a hefty fine, you must understand your rights as a renter. Aside from that, you must do your due diligence. Before renting a property, you must read through and understand the lease contract or rental agreement before signing it. The document explains your rights and rules that must be followed as long as you live on the property. As a renter, here are seven things you have to know and watch out for.

Penalties And Standard Operating Procedures

If you read through your rental agreement, you may find various things and conditions that your landlord didn’t mention while showing you around the property. That can include penalties, fees, and certain restrictions. If you don’t understand any of these rules, circle them and politely ask your landlord to explain.

two people shaking hands

Most rental agreements cover standard operating procedures, such as payment schedules and how to replace a lost key. Keep an eye out for the supplementary clauses that can ding on your wallet and lifestyle. These include instances of landlords preventing tenants from having pianos, pets, and even roommates of the opposite sex. 

If you’re unsure of what’s written in your lease, it’s wise to have someone with a legal background, preferably a lawyer, to go over it with you. It might cost some money upfront, but this could be minuscule compared to the penalties, fees, and damages you might incur in case of a breach.

Rental Price Is Higher Than You Think

The rental price that is listed may not be the final price. So, prepare for a barrage of extra expenses when you move into the property. Some of the standard charges include an application fee, a security deposit, utility deposits, cable bills, and a parking spot fee. According to Twentysomething Inc., you should expect to pay $4,000 in setup costs. 

person using laptop computer holding card

All of these charges can feel overwhelming, especially if you’re a first-time renter. While it’s tempting to lean on credit cards for funding, you don’t want to trade your newfound independence for reliance on credit companies. According to data from the Federal Reserve, the average credit card interest rate is at 14.52%. Meaning, you might pay significantly more in the long run than your initial $4,000 rental setup.

Here’s the bottom line: Renting costs more than you think. All these hidden fees can eat into your monthly savings faster than you imagine. However, you can help yourself and your wallet by creating a budget.

List all your monthly expenses, including the rent, gas, electric, garbage, water, and parking bills, and compare them to your monthly income. The rent should fit within the 50-30-20 rule, an idea popularized by Senator Elizabeth Warren. She says that 50% of your after-tax income should go toward necessities like rent, car insurance, and utilities.

If you exceed 50%, you need to make cutbacks in other places or find a cheaper place to live. Furthermore, the 20% portion of your income should go to savings, while 30% should be allocated for your wants. The last category could pay for entertainment, travel, self-care, or your favorite Starbucks latte. 

You Have A Right To Health And Safety

Landlords have to keep the rental property habitable. You have a right to essentials like ventilation and running water. Your landlord also has a responsibility to mitigate environmental hazards, such as black mold, rodents, or lead paint. Other components of a warranty of habitability include:

  • Hot water
  • Heat in the winter
  • Smoke and carbon monoxide detectors
  • Functioning bathroom and toilet
  • Locks on the doors and windows
  • Compliance with local building codes

Tenants are not responsible for ensuring a minimum standard of habitability. If you notice a problem such as a pest infestation, tell your landlord immediately. Make sure to keep a record of the incident too. Take photos and write notes if necessary.

Your landlord has a legal obligation to resolve the issue if it violates the warranty of habitability. If they refuse to address it, contact your local building inspector. You also have the right to end your lease if your landlord refuses to meet the warranty.

You Need Permission For Almost Everything

The last thing you want is a hefty fine because you broke a rule that was stated in the lease’s fine print. If you have any doubts about what you can and cannot do, ask your landlord first. There’s a good chance that even basic tasks will require express consent.

Simple things like changing locks for security purposes might need permission from your landlord. This should be part of the property’s standard operating procedure. But if it is not stated in the lease agreement, talk to your landlord first and offer to provide a spare key after you change the lock.

You should also ask permission about pets. For example, your lease may permit some dogs but would prohibit certain breeds like a Rottweiler or Pitbull. Other activities that usually require permission include: 

  • Removing plants or trees
  • Repainting the walls
  • Subletting the room
  • Allowing other people to live with you
  • Leaving before the lease expires
  • Making unauthorized repairs or improvements

Insurance Doesn’t Cover Everything

Renters insurance is an affordable way to cover theft or damage that happens in your leased property. According to data from the Insurance Information Institute, the average policy in the United States costs $180 per year or $15 per month. However, like other types of insurance, not all incidents or damages are covered by a basic renter’s insurance. 

Most insurance companies do not cover damage due to floods, earthquakes, sinkholes, and other similar perils. Damage due to pest infestation like bed bugs or rodents is not generally covered. However, some companies offer add-ons if you want to include coverage for damages that are caused by earthquakes or floods.

Furthermore, you must keep in mind that insurance can only cover up to a certain cost. For example, if your coverage is only up to $2,000 in case of theft, and the burglars took your jewelry collection which is worth around $2,800, then the excess amount of $800 is a loss that you must personally shoulder.

Below is a list on average claims limits for other categories:

  • Cash: $200
  • Collectibles: $1,000
  • Goldware and silverware: $2,500
  • Guns and ammunition: $2,500
  • Musical instruments and sports equipment: $500 to $2,000
  • Personal computer: $1,000 to $5,000
  • Other electronics: $1,000

Some insurance providers also implement deductibles, an amount you need to pay before the coverage kicks in. The amount of deductibles vary, so make sure you prioritize paying this amount to ensure your protection right away.

You Need To Make A Home Inventory

A home inventory is a list of all your possessions that are at the rental property. You can categorize belongings by their value, type, or other pertinent characteristics. The checklist should provide a detailed and accurate record in case you make an insurance claim.

Go room by room and record every valuable that your homeowner’s insurance covers. For example, an HO-5 covers all belongings except jewelry, wine, and musical instruments. Whether covered or not, just list them all down on your inventory. If possible, take a photo or video of the item and write a detailed description. 

Store your home inventory and receipts (if any) in at least two forms. That might include a physical copy along with a soft copy on your personal computer, or upload one on the cloud. You can also record, track, and update your home inventory with apps, such as Sortly and Encircle.

Making an inventory will come in handy once you make an insurance claim for theft and calamities like fire, flood, and earthquake. Sure, these events rarely happen, but it is best to be prepared to avoid hassle in the future. 

Only A Judge Can Evict You

No matter what your landlord says, they cannot evict you. The decision has to come from a judge. The landlord must go to court, win their case, and pay legal fees to remove you from the leased space. 

These rules apply regardless of where you live in the United States. Do not let your landlord coerce or intimidate you. You have rights, and they have to respect them. For instance, it’s a class A misdemeanor in New York if your landlord does any of the following:

  • Changes the locks
  • Padlocks the doors
  • Removes apartment or house doors 
  • Removes furniture or personal belongings
  • Shuts off electricity or water
  • Threatens to prevent you from accessing the rented property

Eviction cases are done through summary proceedings. First, you must receive a Notice of Petition from the court. This notice will contain the details of the landlord’s complaint, and when and where the hearing is going to be held. 

While the eviction proceedings are ongoing, your landlord still cannot evict you from the property. When the judge renders a final decision that favors the landlord, that’s the only time that you can be forced out of the property.

The Bottom Line

It’s not uncommon to find that your landlord has failed to tell you a lot of things. It’s your responsibility to fill in the gaps. Taking the time to understand your rental rights will make it easier to navigate certain hurdles during your rental agreement. 

A little proactive planning also goes a long way. If you have any questions about what you can do, read your lease, ask your landlord, research for answers online, look for good insurance coverage, or in special cases, consult a lawyer. The extra effort can help you avoid serious setbacks later.